ORAL ANSWERS TO QUESTIONS

SCOTLAND

The Secretary of State was asked—

Credit

Robert Goodwill: What recent assessment he has made of levels of supply and demand for credit to businesses in Scotland.

Jim Murphy: I am in regular contact with Scottish banks and businesses on the economy. Since the start of the year, the Government have introduced a range of measures to help to increase liquidity and to ease credit conditions for business.

Robert Goodwill: Following the announcement by RBS-NatWest on 5 February that it will make a further £250 million available for small and medium-sized enterprises in Scotland, the Secretary of State said:
	"I shall be talking to other lenders in Scotland over the coming days to encourage them to follow the example being set today."
	How many has he persuaded and how much brass have they come up with?

Jim Murphy: I met the chief executive of the Lloyds group last week in Edinburgh, and the hon. Gentleman will be pleased to know that Lloyds has announced the availability of £2 billion under similar terms.

Jimmy Hood: Does my right hon. Friend agree that the decision of two English local authorities to sue RBS in American courts is welcome? Will he encourage Scottish local authorities that have similar concerns to do the same? Will he assure me that the Government will be as accommodating, if necessary, to any future extradition application from America for RBS bankers as they were in the case of the NatWest three?

Jim Murphy: My hon. Friend will understand why I do not want to comment on any specific impending—or possibly impending—legal process. After centuries of success, the Scottish banks were moments from collapse. Without the intervention of the UK Government and, importantly, the UK taxpayer, the stability that we wish to return to the banks would not be possible. My hon. Friend will understand if I am not tempted to join him in speculating on the other matters that he raised.

Angus Robertson: The success of the private and public sectors is inextricably linked in the years ahead as we go through the downturn. What assessment have the Government made of their plans to take £1 billion out of the Scottish economy in cuts?

Jim Murphy: That is tired rhetoric from the Scottish National party. The Scottish Government have more money than ever and, from today onwards, they will have, over the next two years, more than £2.5 billion more. It is the first time in a spending review period that the Scottish Government have £100 billion.
	The tiresome obsession with grudge is wearing thin with the people of Scotland. We are in the recession together and we will get out of it together. Scotland is stronger because of the United Kingdom, which is and will remain the most successful union of nations anywhere on the planet.

Gavin Strang: Does my right hon. Friend agree that banks are the main source of credit to business? That is why he is right to remind hon. Members of the important intervention that the Government made to stabilise the banking system. Does he agree that all the banks, not least RBS and Lloyds-HBOS, now have an obligation to do all they can to support Scottish business and business generally throughout the UK?

Jim Murphy: I agree with my right hon. Friend, and RBS and the Lloyds group have committed to lending more billions of pounds through the enterprise finance guarantee scheme. Legally binding—that is important—agreements have been made under the asset protection scheme for RBS to lend an additional £25 billion and for Lloyds to lend an additional £14 billion. As he said, it is important for the money to start to flow to Scottish businesses and Scottish mortgage holders so that we can have some return to stability. I think that he appreciates that it was important from October onwards to save the banks from collapse. Our action has helped to ensure that.

Robert Smith: The Secretary of State knows that one of the jewels in the Scottish economy's crown is the exports that have built up on the back of skills learned in the North sea. Does he understand that exploration in the North sea is drying up because of the banks' failure to lend—the new model relies on bank lending? The Government could step in to ease cash flow by paying early the tax relief that they normally pay when production starts, so that the companies get better cash flow to allow them to continue to explore.

Jim Murphy: The hon. Gentleman makes an important point. My right hon. Friend the Secretary of State for Energy and Climate Change and I met representatives of Oil & Gas UK to discuss those specific matters and we will talk to them again. I am happy to raise the concerns of the oil and gas industry in Scotland with the banks—that dialogue will continue. I also agree that the export market is crucial for the Scottish economy as we try to recover. I have the honour next week of leading one of the largest ever business delegations from all sectors of the Scottish economy to China. That is also an important initiative.

Rosemary McKenna: Does my right hon. Friend agree that, although credit is important to business, so is the ability of Scottish business to get involved in emerging markets? For example, Aspen Solutions in Cumbernauld has won a Department for International Development contract to send IT to Sierra Leone to help to build that country's infrastructure. What is he prepared to do to assist other such companies?

Jim Murphy: My hon. Friend is characteristically correct on that matter. I should declare an interest, because I think that Aspen Solutions provides the photocopier for my parliamentary office in East Renfrewshire. For the avoidance of doubt— [ Interruption. ] It is a very busy photocopier, or it certainly will be in the next few months. The point that my hon. Friend makes is entirely right. Small businesses in particular need to be able to access Government procurement and the contracts and portals that are available. In the past, small companies in particular have had to get through too much bureaucracy, which is why it is important that the UK Government and the Scottish Government find new opportunities to enable small businesses to compete for Government work.

Small Businesses

Anne McGuire: When he last met representatives of small businesses in Scotland to discuss their economic situation.

Jim Murphy: I have met the Federation of Small Businesses, the Scottish Chambers of Commerce, the Scottish Council for Development and Industry and the CBI Scotland to discuss the economic situation.

Anne McGuire: The feedback from many of the small businesses in my constituency, many of which are involved in tourism, shows that there is a lack of knowledge at the local bank branch level about accessing Government schemes. In his discussions with Scottish Ministers, will my right hon. Friend emphasise the importance of Scottish Business Gateway and its contractors, and ensure that people understand the Government-backed schemes that are in place and disseminate that information not just to businesses in Stirling, but to small businesses across Scotland?

Jim Murphy: My right hon. Friend raises a point about Stirling and tourism that is specific to her constituency, as she always has done in the House. She is right: we must ensure that the enormous investment in the schemes to support Scottish businesses is accessible and understood, particularly for small businesses. We are trying to encourage businesses to go to the "Real help now" website, where all the information is available. We also need to ensure that the advice through Scottish Enterprise's networks and through UK Government and Scottish Government agencies is readily available, easily understood and deliverable, and we are working very hard on that.

Angus MacNeil: Small businesses are indeed having to shoulder a big responsibility. According to excellent work by the Scottish Trades Union Congress, at the jobcentre in Stornoway in my constituency, 44 people are chasing each available vacancy, which is the highest rate in Scotland. Will the Secretary of State join the Scottish National party and the parties in Wales in the fight against Westminster's forced £1 billion of cuts that are coming our way? Otherwise, more people will be chasing each vacancy in small businesses and other businesses all over Scotland.

Jim Murphy: In these difficult economic times, the SNP's economic policies are indeed a fantasy; they are beyond all fiction. Scottish families in the hon. Gentleman's constituency and mine—and, indeed, across the whole country—are finding additional ways to tighten their belts. There is only one organisation in Scotland that believes that it cannot make any efficiency savings, and that is the SNP Scottish Government. The Scottish Government have more money than ever before and they should get on with delivering it. Instead of this endless constitutional obsession, we should all be focusing on the economic recovery, not constitutional referendums.

Brian H Donohoe: My right hon. Friend will remember coming to a meeting with small businesses in Ayrshire at which the problems associated with the banks being able to make loans and the extra charges now being imposed were raised. With the Government owning 67 per cent. or thereabouts of some of the banks, surely the Government should be putting more pressure on those same institutions to lend the money and to reduce the charges that are now being faced, so that people can get on with their business and unemployment can be maintained at a low level in Ayrshire.

Jim Murphy: My hon. Friend makes an important point. I enjoyed my visit to Ayrshire with him and my hon. Friend the Member for Ayr, Carrick and Cumnock (Sandra Osborne). Points were made in that meeting with small businesses about the availability of credit, which is why we have taken the measures that we have. The Royal Bank of Scotland has announced that it will commit £25 billion of additional lending, while the Lloyds group has announced £14 billion of additional lending, as part of the asset protection scheme. That is legally binding, because we need to ensure that Scottish businesses—particularly small businesses, but also businesses across the whole of the UK, not just in Scotland—can access credit and trade again, as part of a future recovery. I look forward to coming to Ayr again to discuss those matters with him and his businesses.

David Mundell: I welcome the fact that the Secretary of State has met small business leaders and the First Minister to discuss the economic situation in Scotland. However, I am disappointed that once again post-meeting reports were characterised by the First Minister and the Secretary of State briefing against each other. When will we see the mature relationship between Westminster and Holyrood that we should expect in order to tackle an economic crisis of this scale? Perhaps the Secretary of State can make a start on this new relationship today by embracing the Chancellor's call for humility and collective responsibility and apologising to the people of Scotland for the multitude of economic mistakes that his Government have made.

Jim Murphy: Like every Labour Member, I am always sorry when anyone loses their job, and today we are seeing some very difficult unemployment figures for Scotland and the whole of the UK. As we all know, behind those figures there are real people and real families. I am disappointed, as I am sure many Scottish families will be, that, rather than focusing on the real pressures that real families are experiencing, the hon. Gentleman again chooses to participate in the soap opera of the process of politics. People are interested in solutions, not in his soundbites. It is important that we make progress on this matter, and we will do whatever we can to support the newly unemployed, so that they do not become the long-term unemployed.

David Mundell: I am sure that the 1,000 additional people in the dole queues of Scotland this month, and their families, will very be interested to hear the Secretary of State's solutions. In December, he announced that he was putting together a council of economic advisers, who would be named in January. Since then, we have heard nothing. What is the reason for that delay? Is he trying to avoid the mistakes of his predecessor, who used to vaunt the fact that Sir Fred Goodwin represented Scotland in the Chancellor's high-level group on financial services? Does the Secretary of State think that his Government no longer need economic advice, or is it perhaps that nobody wants to be associated with his group?

Jim Murphy: I made no such announcement, then or since. The announcement that I made was about how to get those involved in academia and campaigning together with experts in poverty to ensure that the poorest could see a way through this recession, so that there would not be a generational legacy as a consequence of that, as there was after previous Tory recessions. We will not allow jobcentres to redirect people from unemployment benefit on to incapacity benefit, which is what happened in jobcentres during the previous Tory recession. That policy was wrong, immoral and unforgivable.

John McFall: When the Treasury Committee visited Edinburgh two weeks ago, we found dismay among small businesses that banks were putting arrangement fees and other private charges on them, rather than interest rates. When the Secretary of State meets representatives of the banks, will he remind them that the Committee is undertaking an inquiry into the banking crisis, and that we will be monitoring their lending agreements, under which transparency and value for money for the taxpayer are going to be the key requirements?

Jim Murphy: On behalf of all hon. Members, I want to put on record the respect that exists across the country for the work that my right hon. Friend and his fellow members of the Treasury Committee do, and will continue to do, on this important issue. After seeing on television the hearings involving his Committee and the bankers, I do not think that the bankers will need me to remind them that he is determined to stay on top of this issue. Now that he has asked me to do so, however, I will of course raise the matter with the banks.

Banking

Philip Dunne: What recent discussions he has had with representatives of banks on the future of banking in Scotland; and if he will make a statement.

Jim Murphy: I am in regular discussions with bank representatives. I am determined that Scotland and the UK can remain world centres for financial services.

Philip Dunne: The Secretary of State has just confirmed that the Royal Bank of Scotland's lending commitment is legally binding. Will he confirm that the astonishingly generous pension settlement of its former chief executive, Sir Fred Goodwin, is also legally binding? Will he therefore apologise for the soundbite from his Cabinet colleague who has postured on this issue but not been prepared to apologise for it?

Jim Murphy: These decisions were taken by the Royal Bank of Scotland's board. I find it distasteful that one individual can be rewarded in such a remarkable way for failure and for the undoubted banking vandalism that has put at risk the well-being of so many families and business in Scotland and across the UK. It is important, as we try to re-stabilise the banking sector, that there should be no reward for failure. We find it extraordinarily distasteful that the Royal Bank of Scotland board made that decision.

Tom Clarke: Given the Government's assistance to the banks and my right hon. Friend's discussions with them, particularly those with a Scottish input, is he able to assure us that banks are indeed looking to develop a strategy to provide lending facilities for small businesses and home owners as the Government intended?

Jim Murphy: My right hon. Friend has raised this matter on a number of occasions and he will rightly continue to do so. I happily give him the commitment that we are doing everything we can in that respect. We are also trying to ensure that, where there are specific difficulties in certain business sectors or certain parts of the country, we take additional action. My right hon. Friend, as a Lanarkshire MP, will share my concern that Lanarkshire might be the epicentre of the recession in Scotland. That is why I shall shortly bring together business organisations, politicians, trade unions and others to see if we can find a way through the situation, particularly in Lanarkshire, where a proud and determined people who have come through previous recessions will need additional support now to get through the present recession.

Alan Reid: Will the Secretary of State support the establishment of a post bank, publicly owned, operating in local communities and taking decisions about granting credit to small businesses based on local knowledge rather than a nationwide formula? I believe that that would give many viable small businesses throughout Scotland access to the credit that the larger banks are denying them.

Jim Murphy: The Government are always looking for additional ways to support small businesses in communities, and we particularly like to support the community and voluntary sectors and social enterprises. I would be happy to discuss that with the hon. Gentleman. It is important, however, to focus on some of the community facilities and support that are already in place, particularly for families rather than for businesses. I believe that we should all celebrate the remarkable success and important role of credit unions throughout Scotland. They will play an important part in the recession.

Mark Lazarowicz: Thousands of my constituents work in the banks and financial services sector, and the vast majority certainly do not receive big bonuses and multi-million-pound pensions. Some are losing their jobs and many more are worried about their future. Does my right hon. Friend agree that Government at all levels—UK, Scottish and local—should work together to find a long-term strategy to get out of a common situation? What is he doing to get such a strategy agreed among all the players in the field?

Jim Murphy: My hon. Friend raises an important point, which I know is particularly relevant in his constituency, as it includes a large number of financial services sector workers. What has happened has, unfortunately, led to the portrayal of all those in the banking sector as greedy and in receipt of enormous bonuses. As he knows and as we all know, a large number of people working in banks in the back office or as bank tellers, for example, are on very average wages and they work very hard. Some of them may have had share options, which are now more difficult. It is important that we stop demonising all bank workers simply because of the irresponsible behaviour of a tiny minority of those who previously had leading and well paid positions in these organisations.

Alistair Carmichael: Does the Secretary of State agree that today's publication of Adair Turner's proposals for a new regulatory system for the banking sector is an illustration of the extent to which the previous regulatory system put in place by the Prime Minister failed? What does he say today to the thousands of Scots who face losing their jobs in the financial sector as a consequence of the Prime Minister's previous failure?

Jim Murphy: The fact is that the international regulatory regime did not keep pace with a remarkable change in the global movement of finance—a fact now well acknowledged across the world. That is why we need, as part of the G20 process, a new architecture for regulation. Banking will never be and should never be the same again. As for the hon. Gentleman's point on unemployment, we will do everything we possibly can to ameliorate the consequences of this international recession. Many Scottish families have people who have lost their jobs over the past few weeks, as has been confirmed today. As I say, we will do everything we possibly can to stop the newly unemployed becoming the long-term unemployed by giving people additional skills and retraining in order to retain their confidence and an attachment to the labour market. Of course things are more difficult. Not everyone can walk straight into a job, but we should not ignore anyone, and we should try to support people to keep their skills and confidence fresh.

Unemployment (East Lothian)

Anne Moffat: What assessment he has made of the level of support to long-term and recently unemployed people in East Lothian constituency.

Ann McKechin: We are giving people across Scotland real help now by offering greater support to help them to move back into employment. We have invested £1.3 billion in Jobcentre Plus services to ensure that those looking for work receive individual support, and an additional £0.5 billion to guarantee more help for people who are unemployed for six months or more.

Anne Moffat: I am sure that the whole House will now want to hear my supplementary question.
	We currently have quite a good level of employment in East Lothian—over 80 per cent.—but I am concerned about the possibility that unemployment will rise both in East Lothian and in Scotland more widely. The position could be greatly improved if the banks adopted measures allowing them to enable small businesses to recover by lending them money. Constituent after constituent has said to me recently that they will have to make people unemployed because the banks will not lend to them. The arrogance of the banks beggars belief.

Ann McKechin: My hon. Friend has raised an important point to which the Secretary of State has already referred this morning: the need for banks to start lending in order to enable businesses to survive and to invest. We have introduced the necessary measures to make that possible. I am sure that she welcomed the recent announcement by the Royal Bank of Scotland of the provision of additional funds focused particularly on small and medium-sized enterprises, many of which are based in her constituency.
	It is important to note that the United Kingdom still has the second lowest unemployment in the G7 area, but we are not complacent. That is why, from April, we will be providing additional help for those who are unemployed for more than six months, in the form of a £1,000 recruitment subsidy.  [Interruption.]

Mr. Speaker: Order. There is too much noise in the Chamber.

David Hamilton: My constituency is next to East Lothian, and it is in the same position. The problem is not just unemployment, but the fact that companies are reorganising themselves. Would my hon. Friend and my right hon. Friend the Secretary of State consider bringing the banks to Dover House, so that Members of Parliament can have a discussion with them, and put our cases to them? Why are the banks still not lending to companies that are reorganising themselves to try to get through their present difficulties?

Ann McKechin: I should be more than happy to speak to any of my colleagues about constituency issues, and about how we can help Members to ensure that local banks respond to the needs of companies in their areas. I welcome the fact that East Lothian council recently joined a local employment partnership, enabling us to work with employers in trying to deal with some of the problems.

Scottish Parliament (Financial Powers)

John Mason: What recent discussions he has had with the Chancellor of the Exchequer on financial powers for the Scottish Parliament.

Jim Murphy: I have regular discussions with my right hon. Friend the Chancellor. Sir Kenneth Calman's commission on Scottish devolution is supported by business and trade union leaders, and by the Labour, Conservative and Liberal Democrat parties.

John Mason: Does the Secretary of State agree that it is useful for Governments to be able to borrow at a time of recession— [Interruption.]

Mr. Speaker: Order. An hon. Member is addressing the House. The Chamber is far too noisy.

John Mason: Does the Secretary of State agree that at a time of recession it is important for Governments to be able to borrow, and that the Scottish Government should have the power to borrow?

Jim Murphy: The Scottish Government have more money than ever before. The current Scottish Government have more than double the budget that the late Donald Dewar had when he was First Minister. I think it important for politicians in all parties in Scotland to find additional ways of working together through the recession. We are in it together, and we will get out of it together.
	I appeal again to the Scottish National party to stop putting its obsession with the constitution before the priorities of our country, which are to do with economic recovery. Scotland will never forgive any political party that puts its interests before those of our country.

Adam Ingram: Is my right hon. Friend aware that although financial powers are important, they will take some time to produce any change, if change is coming? What we need now is action. Unemployment in Lanarkshire is higher than it is in any other region, and Lanarkshire also has the fewest job vacancies. I welcome all the initiatives that my right hon. Friend is taking there—unlike the one-trick pony who is First Minister in the SNP Administration in Scotland, who is interested only in division and in rubbing Scotland out of the United Kingdom.

Jim Murphy: My right hon. Friend campaigns tirelessly for the people and businesses of Lanarkshire, which has a proud industrial heritage, not least in mining and of course the steelworks. The people of Lanarkshire have shown their determination and resolution to rise from previous recessions. Working with him and other fellow Members, and businesses and trade unions, we are determined to do everything possible to make sure that Lanarkshire is not the epicentre of this recession in Scotland.

PRIME MINISTER

The Prime Minister was asked—

Engagements

Jim Sheridan: If he will list his official engagements for Wednesday 18 March.

Gordon Brown: Before listing my engagements, I am sure the whole House will wish to join me in expressing our deepest condolences to the family and friends of those killed on operations in Afghanistan over the last week. They were Corporal Dean John, Corporal Graeme Stiff and Lance Corporal Christopher Harkett. They, and all those who have lost their lives in conflict, deserve our profound gratitude for their service not just to our country, but to the peace of the world. Their courage and sacrifice will never be forgotten.
	This morning, I had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall have further such meetings later today.

Jim Sheridan: I am sure that everyone in the House will wish to associate themselves with the Prime Minister's comments.
	Today's unemployment figures are extremely disappointing and, as a former shipyard worker who experienced the indignity of three years' unemployment in the early 1980s, I can well understand the frustration and anger that unemployment brings. May I ask my right hon. Friend not to abandon the unemployed and to make sure that the Government continue to invest in the skills and training needed to help us through these difficult times?

Gordon Brown: I am grateful to my hon. Friend. Any person who loses their job or is in fear of losing their job is a matter of personal regret for me and the whole Government. I do not regard unemployment as a statistic; I regard it as one person, a second person and a third person who needs our help. That is why we will do everything we can to help people get back into work: that is why we have announced more apprentices; that is why we have announced more help with training; that is why we have announced that from April there will be help for those who have been unemployed for six months; and that is why we have put £1.3 billion into the jobcentres—money that is necessary, so that we can help hundreds of thousands of people in the next few months get back into work.

David Cameron: I join the Prime Minister in paying tribute to Corporal Dean John, Corporal Graeme Stiff and Lance Corporal Christopher Harkett. The fact that more than 150 of our servicemen and women have been killed in Afghanistan is a reminder, once again, of the huge sacrifices our armed forces are making on our behalf. We praise their bravery, we honour their memory and we must look after their families.
	Today, as has been said, unemployment has risen to more than 2 million people. The increase in the claimant count is the sharpest since records began. Does this not reveal that the claims repeatedly made by the Prime Minister that Britain is one of the best-placed countries in the world to withstand recession were simply nonsense?

Gordon Brown: I came into politics, and I stood for Parliament, because I wanted to help tackle unemployment and poverty, and that is why we are announcing the most comprehensive programme to help the unemployed. But I have to tell the right hon. Gentleman that unemployment is higher in France, in Germany, in Japan and in America. It is higher in most of the other countries we deal with, but we are taking urgent action to help those people in Britain who are unemployed. We are spending £1.3 billion helping our jobcentres and helping people into work. The Conservatives would not spend that money. I ask him why he would not help us deal with the problem of unemployment.

David Cameron: I have to say to the Prime Minister that Members in every part of this House will contrast what he said with the fact that 144 of our further education colleges—the exact organisations we need to retrain people who are unemployed—are having their building projects halted. There is this enormous gulf between what he says every week and what his Government are actually doing. Let me return to the question. People will simply not understand why the Prime Minister is so incapable of ever admitting that he got anything wrong. It is not just the unemployment figures today; the International Monetary Fund has said that the recession will be deeper and longer in Britain than in many other countries, and that Britain will be the only major economy in the world that will be in recession next year. So let me ask him again: was it not wrong to claim that Britain was one of the best-placed countries in the world to withstand recession? Admit it.

Gordon Brown: No, because the fact is that America entered recession more than a year and three months ago and the euro area entered recession in April last year, whereas we entered recession in July. We stopped ourselves going into recession for months after what had happened in America, and the action that we are taking now is designed to get us through it as quickly as possible.
	Let me correct the right hon. Gentleman on FE colleges—we are going to spend £110 million this year investing in them. Let me correct him on public expenditure— we are investing £44 billion this year, in health, in education and in other capital investment projects to help us through this downturn. Let me correct him again on unemployment. Unemployment is far higher in America, in France, in Germany and in the euro area. I know that is of little comfort to people in this country, which is why we are doing everything we can to help them.

David Cameron: Let me correct—[Hon. Members: "More."] Yes, there is plenty more. Let me correct the Prime Minister on the figures that he has just given to the House of Commons. He says that the recession started in July, but the economy stopped growing in April last year; we have been in recession for almost a year.  [Interruption.] Yes, let me correct him on the further education colleges. He should come to my constituency of Witney, where people are in temporary classrooms because the whole building project has had to be abandoned because of his incompetent Government.
	The entire country will see that the Prime Minister is in denial about the length and the depth of the recession. He likes to talk about the schemes that he has announced, so let us have a look at them. Can he confirm that not a single unemployed person has been helped by the recruitment subsidies that we called for in November and that he announced in January? Can he confirm that not a single home owner has been helped by the home owners mortgage support scheme that he announced in December? Is it not the case that those two specific schemes simply are not operating?

Gordon Brown: First of all, the right hon. Gentleman is wrong about the start date of the recession. Secondly, he is wrong about further education, because £110 million will be spent on it this year. Thirdly, he says that we are not doing anything, so I should tell him that in the last recession there was no help available for the unemployed, but we are spending £1.3 billion to help people get into work. Let us just go through the things that we are doing: 300,000 people used to be helped under Train to Gain and that will rise to 1 million; we have raised the levels of mortgage support, so that people can stay in their homes even when they lose their jobs; and, as the Secretary of State for Work and Pensions announced, in April—next month—programmes will come in that will help people who have been unemployed for six months. That was the date we set. The problem is that the right hon. Gentleman asks us to do more, but he is the only Opposition leader in history who is asking us to do more when saying he will spend less—it just does not add up.

David Cameron: We have just had the view from the bunker, where all these schemes are operating and where everything has been implemented, but the fact is that, on the ground, these things are not happening. We get a lecture in competence from a Government who are so incompetent that they could not even stop Fred Goodwin, or, sorry, I should say Sir Fred Goodwin—the Prime Minister knighted him for his services to the banking industry—walking off with a pension that is worth £60,000 a month. The lack of action applies not just to the housing scheme and the job scheme, because the asset-backed securities scheme is not up and running, and the working capital scheme is not working properly. Is that not why the CBI said that this Government have a total lack of a "coherent strategy"? Is that not why Shelter says that people facing repossession have been given "false hope"? Does the Prime Minister regret giving those people false hope?

Gordon Brown: That is not what we have done. We have negotiated with the building societies and banks a six-month moratorium for people who are faced with mortgage repossession. We have sent new orders to our courts that lenders cannot, as a first resort, go for repossession; they have to go through all the proper processes before they even consider that. We are helping unemployed people with their mortgages at a level that has not been done before, and next month we will bring in the protection scheme, under which we are insuring the banks and building societies against loss so that people can phase their mortgages over a longer period of time. The problem that the right hon. Gentleman has got is that everything he proposes, he will not fund. On Monday, he said there would be more cuts in public expenditure—already he has refused to support the £1.3 billion that we are spending to help the jobcentres and to help people who are unemployed. It is simply not credible to come to this House and say that he is urging us to do something when he would pay for absolutely nothing.

David Cameron: I do not know why the Prime Minister does not listen to his Employment Minister, who had the courage to leave the bunker for a moment this morning and say that
	"there is a frustration about these schemes and the money and the credit getting through."
	If the Prime Minister had listened to us, he would have introduced a national loan guarantee scheme back in November, and it would have been operating for five months. Should not he also listen to the German Chancellor, Angela Merkel, who stood with him in Downing street and said— [ Interruption. ] The hon. Member for Bolsover (Mr. Skinner) should be quiet. I know that he wanted miners to join the Government: well, now he has got one—Lord Myners— [ Interruption. ]

Mr. Speaker: Order. Miss Snelgrove, I have told you before. It is not the done thing to shout in the Chamber. You should not be doing that. Perhaps you need a wee tablet from the doctor.

David Cameron: They all want Lord Myners to negotiate their retirement packages: call an election and we can arrange that.
	Back to the German Chancellor, who said that
	"if we want to make real impact, you really must implement the package first before you talk about the next step".
	Is not that right? Are not this Government just running round, like headless chickens, with initiative after initiative that never gets implemented? Is not that combination of ineffectiveness and hyperactivity the worst combination of all?

Gordon Brown: The right hon. Gentleman opposed the German fiscal expansion. He has opposed every fiscal expansion—in the US, in Germany and in France. He is out on a limb in opposing public expenditure rising in the downturn: he wants to cut it, and he wants to cut it now.
	On the right hon. Gentleman's great £50 billion scheme, the shadow Chancellor said that it
	"does not add to public expenditure."—[ Official Report, 18 December 2008; Vol. 485, c. 1228.]
	However, the shadow shadow Chancellor has said that
	"the taxpayer will take some of the hit."
	The Conservatives do not know whether the scheme that they are proposing will cost money or not cost money: that is how bereft they are of ideas for the economy.
	The Leader of the Opposition does not understand that this is an unprecedented global banking crisis. Unprecedented means without precedent. Global means that it affects the whole of the world. The sooner that he wakes up to the fact that we need global action to deal with it, the better for our country.

David Cameron: I am glad that the Prime Minister is back to reading out quotations, because we now know how long a pledge from him lasts. Yesterday, he said in  The Guardian:
	"I personally have always said that modern politics, with its focus on who said what, when, how and why, is far too divisive for the problems that a country's got to meet".
	What a complete phoney!  [ Interruption. ]

Mr. Speaker: Order. Let me chair the proceedings. That remark should be withdrawn— [ Interruption. ] Order. I will do the talking. It should be properly withdrawn.

David Cameron: I am happy to withdraw that remark.
	The Prime Minister mentioned the Germans. Of course, they went into the recession with a surplus, not a deficit. That is why the German Finance Minister said that the VAT cut, which we opposed, will build up debt that will take a generation to pay off.
	Let us be clear about what has happened today. This Government have announced the biggest rise in the dole queue since records began. That is a rise faster than under any Conservative Government or any previous Labour Government. Is it not the case that the Prime Minister has led us to this point without a hint of an apology, and the British people will never forget it?

Gordon Brown: First of all, quoting German Finance Ministers in the week when the Conservatives are walking away from the mainstream of European politics is absolutely absurd. Secondly, we are prepared to spend money to help the unemployed; we are not going to walk by on the other side, we are going to help them. However, when it comes to the Conservatives' main proposal for spending money, let us be absolutely clear that we are spending money to help the unemployed whereas the Conservatives' first priority is an inheritance tax cut for the 3,000 top estates in the country.
	What further indication do we need of Conservative priorities than the fact that the motion for today's debate on the economy does not even mention the word "unemployment"? That is how they feel. They are the party of the few; we are the party of the many.

Fraser Kemp: Six months ago today, a constituent of mine, Claire Walker, died of cervical cancer. She was 23 years of age. Will the Prime Minister join me and Claire's family, friends and supporters who are campaigning in London today in wholeheartedly welcoming last Friday's announcement that there will be a full, independent and comprehensive review to consider the urgent case for the reintroduction of cervical cancer screening for young women under 25?

Gordon Brown: I appreciate everything that my hon. Friend said. Any family that is suffering because of cervical cancer—or, indeed, because of any form of cancer—has all our sympathies. We want to do everything we can to help, which is why we have introduced the vaccinations for teenagers—we have extended that programme and are ready to extend it further—and why the independent review that he mentioned will consider the case for making cervical cancer screening available to women under 25. It is our responsibility to look at all the available medical evidence about the risks as well as about the advantages of such screening. That will be done and I assure him that we take seriously the needs of anyone who is facing cancer at this time.

Nicholas Clegg: I would like to add my own expressions of sympathy and condolence to the family and friends of the three soldiers who tragically lost their lives in Afghanistan in the last week. With the death toll among our brave servicemen and women now at more than 150, it is right that we should pause to reflect on the immense sacrifice that they and their families have had to endure in serving this country and, of course, the people of Afghanistan.
	Does the Prime Minister believe that the culture of frenzied target setting that has been introduced into the NHS by his Government had any role to play whatsoever in the horrific events that occurred at Stafford general hospital?

Gordon Brown: May I and the Health Secretary first say that we apologise to those people who have suffered as a result of the mistakes that have been made at Stafford hospital? Everybody who uses the national health service has a right, if they put their faith in the NHS at that hospital, to expect the highest standards of treatment. These were not the highest standards of treatment. They have now been investigated, and they fell far short of the standards that people expect. The first thing that we have to do is to assure the families of those who have suffered and relatives who are grieving and who want answers to their questions that there will be independent reviews, if they seek them, of their families' case notes so that they can be assured of what has happened. That is the first thing that we will do.
	The second thing that we have to look at is whether this is a generic problem or a problem at a specific hospital. I am assured by the Healthcare Commission—the chief executive has made a statement today—that there is no equivalent case in all the other NHS hospitals across the country. We should therefore focus on the individual mistakes that were made by management and deal with them. A further inquiry is going on to look at what happened between 2003 and 2005. At the same time, the Care Quality Commission is looking into what lessons we can learn in general from what happened.

Nicholas Clegg: When doctors at that hospital have confirmed that they were instructed by their managers to abandon seriously ill patients and to treat people with minor ailments instead in order to meet the Prime Minister's targets, it is not enough to talk of reviews, inquiries and to blame other people. Will he scrap the mad targets that make hospitals tick boxes rather than look after the desperately ill?

Gordon Brown: Whatever happened in that hospital is unacceptable and should never be allowed to happen again. I too have looked at all the detail of the evidence in this report, which also says that nursing care standards were poor but that they were never discussed or identified as being poor, that results of patient surveys were available but were never reported to the board of management, and that, at the time of the C. difficile infection, nobody on the board or among the general public ever knew that the rate of infection had doubled. Those low standards of management in the hospital, therefore, must be dealt with by our review.
	I take seriously everything that has come out of this case, but I think that it is not unreasonable in the modern age to expect a hospital to have the highest standards of care and at the same time ensure that every cancer patient is seen within two weeks. It is not unreasonable to say that hospitals should have the highest standards of care and ensure that there is a wait of only 18 weeks between a person seeing a doctor and getting an operation. It is not unreasonable to say that the highest standards of care should be pursued in accident and emergency departments and that people should not have to wait for hours before they get treatment.
	We will look at all the evidence that is available. The Care Quality Commission will look at it too, but I think that we have to deal with the individual management failures in the hospital and then learn whatever lessons we can for the future of the national health service.

David Kidney: After these damaging revelations about Stafford hospital, there are relatives today in turmoil, wanting to know whether their loved ones' deaths could have been prevented. I want to press the Prime Minister on what he has just said about reviews. I say that those relatives are entitled to an independent assessment to answer that question for them. Does he agree with that?

Gordon Brown: There are no excuses for what happened in Stafford hospital—no excuses at all. That is why every single relative who asks for it has a right to have the case notes reviewed independently, and to see the notes themselves. That is what will happen. Relatives will have a right, therefore, to take whatever action is necessary as a result of seeing the papers before them.
	At the same time, Mr. George Alberti, who is recognised as being a very pre-eminent surgeon, is going to go to the hospital to look at the progress that has been made, and which has been reported by the Healthcare Commission already. He will ensure that, in future, patients at Stafford hospital have the assurance of the highest standards. The chief executive and the chairman of the trust have been removed. There is a new chief executive who will look at disciplinary procedures wherever they are necessary. We have got to do everything to assure people that they can have the trust that we know that everybody wants to have in the national health service and in every hospital in the country.

Annette Brooke: Is the Prime Minister still committed to robustly protecting the green belt? If so, will the Government scrap the south-west regional spatial strategy and allow local communities to develop plans to address local housing need and protect precious open spaces?

Gordon Brown: If the hon. Lady wants to talk about the future of the regions, I hope that she will join the regional Committees in the House of Commons to debate that. As for the green belt, I think that we are doing more than any Government to protect it, and that is what we will continue to do.

Derek Twigg: The proposed Mersey gateway bridge will help ease traffic congestion in my constituency and in the constituency of my hon. Friend the Member for Weaver Vale (Mr. Hall). The previous Tory Government turned down the project, which will also create more than 4,000 jobs in Cheshire and Merseyside. Will my right hon. Friend do all he can to ensure that there is no delay in the final decision approval, as this is exactly the sort of infrastructure project that will help economic recovery?

Gordon Brown: Yes. My hon. Friend has been working very hard and representing the case of his constituents on this matter, and I can assure him that we will look very carefully at what he says. I can tell him that we plan to advance public spending in the year that is coming. We plan to spend £44 billion in the year from April, and that will add to the number of jobs in every constituency.

Adrian Sanders: It was announced today that another 800 jobs have been lost in the south Devon area. That will put more pressure on South Devon college, which helps to train people and get them back into work. Will the Prime Minister look urgently at the funding blockages that are preventing that outstanding college from expanding and helping some of the people who are losing their jobs?

Gordon Brown: I am grateful to the hon. Gentleman for that question, and I will look at the matter. I repeat that the investment that is to take place in further education colleges—it is a capital programme—will be £110 million this year. I can also say to him that the Train to Gain programme, in which colleges are often involved, is expanding from 300,000 people to 700,000 and then a million people, so more people will be able to take courses that will give them the necessary skills. Of course I will look at the specific issue in his constituency that he has raised.

Jim Devine: As my right hon. Friend is aware, a prisoner recently released from Guantanamo Bay has been making very serious allegations about torture. Can he assure me and the rest of the House that the claims will be fully investigated?

Gordon Brown: I have placed a written ministerial statement in the Library this morning, and I want to update the House about what the Government are doing, so that we can deal unequivocally with the issue of our condemnation of the use of torture. We will now publish, after consultation with the Intelligence and Security Committee, the guidance to intelligence officers and service personnel on detention, and on interviews of detainees overseas. We will invite Sir Peter Gibson, who is a former Lord Justice and the current intelligence services commissioner, to monitor complaints to do with the guidance, and to report to me annually. In order to have systems that are robust, we will ask—

Hon. Members: This is a statement.

Mr. Speaker: Order. Let the Prime Minister speak.  [Interruption.] Let the Prime Minister speak.

Gordon Brown: In order to ensure that our systems are robust, we will ask the Intelligence and Security Committee to consider any developments and relevant information since its last report. [Hon. Members: "This is a statement."] I have faith in our security services. We must ensure that the public also have all the faith that is necessary in our security services, and we condemn absolutely the use of torture.

Mr. Speaker: Order. I hear shouting. If anyone feels that there should be a statement, they should ask for an urgent question; that is the way to do it.

William Cash: What the Prime Minister just said about the hospital in Stafford simply is not enough. We do need a review of the case notes, but we do not just want a Care Quality Commission review. What we need is a full public inquiry to get to the bottom of the matter. It is not enough simply to deal with the issue in the way he described. We need to know whether compensation will be payable to the victims, and we need to ensure that the people responsible who are still on the board are sacked, and not simply suspended on pay.

Gordon Brown: I know that the hon. Gentleman's constituency is covered by the hospital as well, so let me reply to him in some detail. All disciplinary matters are being dealt with at the moment by the new chief executive, who is looking at what has happened in the hospital over these last few years in the light of the Healthcare Commission report. A Healthcare Commission report will be followed up by a review into what happened between 2003 and 2006, and an inquiry by George Alberti about whether the standards that have been raised are actually satisfactory for people in the area. At the same time, the Care Quality Commission will look at the standards of health care overall, and look at whether there is an early warning system that could be better in future for dealing with such problems. Individuals, of course, can bring what cases they wish, but I think that they will welcome the fact that the individual case notes are to be made available to them, and are to be reviewed independently.

Hywel Francis: May I add my condolences to the families of all the servicemen who have died recently in Afghanistan, including Corporal Dean John of Port Talbot in my constituency? Dean was a member of a well-respected service family. Many of our 6 million carers in this country have benefited significantly from the Government's new national carers strategy, and we should welcome that. However, the carer's allowance has not been improved. Will my right hon. Friend the Prime Minister agree to meet carers' organisations, and the all-party carers group, to discuss ways of improving carers' benefits, as recommended by the Work and Pensions Committee report last year?

Gordon Brown: The 6 million carers in our society are at the heart of the help that is necessary for people who are in need of assistance and care, and we want to do everything that we possibly can to help them. I will happily meet the delegation that my hon. Friend suggests I meet. As he knows, the national carers strategy made proposals about respite care, about training for carers, and about pensions for carers. We are also looking at the allowances that are available for carers. We want to do whatever we can to help that group of people who give their lives to help people who are in difficulty and in need. I look forward to meeting the carers' organisations.

James Arbuthnot: On Saturday my right hon. Friend the Member for North-West Hampshire (Sir George Young), my hon. Friend the Member for Basingstoke (Mrs. Miller) and I visited Basingstoke and North Hampshire hospital to see an out-of-hours medical service provided by local GPs. It is a fantastic success story called Hantsdoc. It has been rated the best health provider in Hampshire, it has nearly 100 per cent. customer satisfaction, and it is locally run and locally devised. Is this not a better model than the top-down, target-driven, Whitehall-imposed approach that seems to be, sadly, less successful elsewhere in the NHS?

Gordon Brown: It does not seem to me incompatible to have locally run health services that are of the high standard that the right hon. Gentleman has asked for and seen in his constituency, and which I have seen in many hospitals and GP-led centres in the country, and to have minimum targets which are objectives that are set and can be met for the country as a whole. I come back to this: do we want to get rid of the objective and, indeed, the guarantee that within two weeks someone suffering from cancer can be seen by a clinician? Do we really want to go backwards on that? Surely that must be a national objective which all people can support.

Meg Munn: Many British children on the island of St. Helena are living with only one parent or without both parents, as adults of working age have to leave the island to find work elsewhere. The decision this week to put off a decision on the airport has dismayed them. Will my right hon. Friend commit to an early decision and give those families some hope that they can live together again?

Gordon Brown: I know that my hon. Friend held a debate on the matter in Westminster Hall. It is important to say that we have set up a consultation on options for access to St. Helena. That consultation will report, and then we will make the right decision.

Mid Staffordshire NHS Foundation Trust

Alan Johnson: With permission, Mr. Speaker, I wish to make a statement about Stafford hospital, following the Healthcare Commission's investigation published yesterday.
	The report details astonishing failures at every level, and shows that for patients admitted for emergency care at Stafford, there were deficiencies at every stage. The Healthcare Commission found disorganisation, delays in assessment and pain relief, poor recording of important information, symptoms and requests for help ignored, poor communication with families and patients, and severe failings in the way the trust board conducted its business. While the management was obsessed with achieving foundation trust status, the wards were understaffed and patient care seriously compromised.
	The report cites incidents of patients left without food or drink for days because operations were delayed, of nurses who had not been properly trained to use basic, lifesaving equipment, and of patients admitted to A and E being triaged by receptionists. It notes that there was a dangerous lack of experienced staff, observation and monitoring of patients was poor, essential equipment often was not working, and there were no systems in place to spot where things were going wrong in order to make improvements. In short, it is a catalogue of individual and systemic failings that have no place in any NHS hospital, but which were allowed to happen by a board that steadfastly refused to acknowledge the serious concerns about the poor standard of care raised by patients and staff.

Jacqui Lait: rose—

Alan Johnson: I apologise on behalf of the Government and the NHS for the pain and anguish caused to so many patients and their families by the appalling standards of care at Stafford hospital, and for the failures highlighted in the report.
	In the course of my statement I will set out the actions that we will take in response to the report, but I want to begin by summarising the events that led to the Healthcare Commission's investigation. The Commission became aware of high mortality rates for specific conditions or operations at the trust during the summer of 2007 through its routine analysis and a statistic known as hospital standardised mortality ratios, more commonly called SMRs, produced by the Dr. Foster research unit, based at Imperial college.
	Whenever the Healthcare Commission is alerted to unusually high mortality rates, it initially asks the trust to provide further information to explain such anomalies. High standardised mortality ratios are not necessarily an indicator of poor clinical performance and nor do they signify that there have been avoidable deaths, but they do act as a screening tool to identify the need for investigation. Further analysis showed that there were consistently high mortality rates for patients admitted as emergencies going back over several years.
	The trust repeatedly dismissed the significance of these statistics, saying that they could be explained by the problem it was having with the recording of data. The accuracy of information coding—that is, the system for cataloguing types of surgical and other interventions—had historically been poor in the trust, and the internal group that the trust itself had set up to consider high mortality rates assumed that they could be explained by coding errors.
	The Healthcare Commission refused to accept this explanation and launched a full-scale investigation in March 2008. In May of that year, following its first visit, the commission asked to see the chief executive and set out its immediate concerns about the poor patient care and inadequate staffing levels that it had observed. Since then, there has been gradual improvement. The Healthcare Commission states in its report that
	"the Trust deserves credit for progress on infection control and for responding positively to the concerns of the Commission."
	On an unannounced visit in February to the accident and emergency department, the Healthcare Commission noted significant improvements. Its visit raised no immediate concerns about the safety of patients admitted to the accident and emergency department.
	However, the failures are stark and they occurred over a substantial period of time. Patients will want to be absolutely certain that the quality of care at Stafford hospital has been radically transformed and, in particular, that the urgent and emergency care is administered safely. I have today, jointly with Monitor, asked Professor George Alberti, the eminent physician and national clinical director for urgent and emergency care, to lead an independent review of the trust's procedures for emergency admissions and treatment and its progress against the recommendations in the report. He will report in five weeks' time and his findings will be published to the House.
	The Healthcare Commission has told me that it is confident that Stafford hospital is an isolated case, and that having looked at other trusts with similarly high standardised mortality ratios, it is reassured that a similar succession of serious lapses in care has not occurred elsewhere.
	The National Quality Board has been set up to look at how organisations work effectively together in patients' best interests. It is composed of representatives of the royal colleges, patient groups, regulatory bodies and clinical experts. I have asked the board to look at how we can ensure that any early signs that something is going wrong are picked up immediately, that the right organisations are alerted and that action is taken quickly.
	The public and the House will want to know how the problems at Mid Staffordshire could have remained undetected for so long. One of the reasons the Healthcare Commission began its investigation was that after having been initially alerted to the problem in the trust, it became clear that there had been serious failings for some time. The Healthcare Commission's report raises serious concerns about why the primary care trusts and the strategic health authority either failed to spot the problems at the trust or, having spotted them, failed to act.
	I have asked Dr David Colin-Thomé, the national clinical director for primary care, to review the circumstances surrounding the Mid Staffordshire NHS Foundation Trust prior to the Healthcare Commission's investigation to learn lessons about how the primary care trusts and the strategic health authority, within the commissioning and performance management systems that they operate, failed to expose what was happening in this hospital. His recommendations will focus on what commissioners across England—GPs and PCTs—can learn from this case to be sure they are advocating effectively on patients' behalf.
	Our principal concern today must be to reassure the families and friends of patients who have died at Stafford hospital that they will be able to ascertain whether any of the failings detailed in the Healthcare Commission's report contributed in any way to the death of their loved ones. As the Healthcare Commission has said, it is not possible to determine conclusively from any set of statistics whether there were any avoidable deaths owing to poor standards of care—that can be done only through a case notes review. I can confirm that the new leadership of the trust will respond to every request from those relatives and carry out an independent review of case notes to determine whether or not the care that they or their loved ones received was appropriate.
	The failings at Stafford hospital are inexcusable. I hope that we can close this chapter in the hospital's history by acknowledging and addressing past failings and by ensuring that lessons are learned by government and the NHS at all levels to make sure that these terrible failures are never allowed to happen again.

Andrew Lansley: The House will be grateful to the Secretary of State for his statement and will share with him the apology that he expressed on behalf of the Government and the NHS to all the families and patients adversely affected by the events at Stafford hospital.
	We were all shocked and appalled at the failings in patient care at the hospital. There was a systematic failure in respect of patients receiving emergency care. Triage was done by unqualified receptionists; treatment was carried out by too few, too poorly trained doctors and nurses; there was inadequate staffing in the emergency department and on wards; nurses were poorly trained; patients were pushed out to the wrong wards, where the care that they needed was not available; patients were left in pain; patients were left without food and drink; basic hygiene needs were not met; nil by mouth patients were left for days waiting for operations; cardiac monitors were switched off because the nurses were not trained to use them; there were too few critical care beds; and there was a failure to prevent blood clots that went on to kill patients.
	A number of things were lacking in the Secretary of State's statement. I say first that it would have been better for him to have acknowledged the role played by Julie Bailey and the Cure the NHS campaign in Staffordshire in calling attention to what had happened at Stafford hospital. As the Healthcare Commission said in its report, when it launched its investigation there was an unprecedented level of response from patients and relatives who wanted to tell its representatives what was happening. That, frankly, is illustrative of the abject failure of the NHS to listen to what patients and relatives were telling it about what was happening at the hospital.
	We do not know how many patients died needlessly, but we do know that the board of the trust did not listen to complaints from patients and their families, or even to the doctors and nurses on the front line at the hospital. The board did not devote its efforts to the quality of care for patients but was obsessed with financial results, organisational change and targets—not with the care and safety of patients.
	Our job is to find out not just what happened, but why it happened—and, by doing so, to ensure that it does not happen again. Clearly, the board of the trust was appointed to this task, but it should not have been simply left to get on with it. What was the primary care trust, which was responsible for commissioning services from the hospital, doing about the situation? The Healthcare Commission report says:
	"Staff from the PCT involved in commissioning told us that they inherited a chaotic situation"—
	following the merger of primary care trusts—
	"with no detailed handover from the previous PCTs...The minutes of the PCT's performance...committee did not reveal any evidence that the PCT was aware of any problems in the quality of service being provided by the acute trust".
	The PCT was concerned with cost and volume, not with quality. I urge the Secretary of State to ensure that a powerful lesson is learned about how commissioning is undertaken across the country.
	The strategic health authority was, until February 2008, responsible for the performance management of the trust. It saw the mortality data at the same time as the Healthcare Commission, asked what was happening, sent the university of Birmingham to do an academic inquiry and came away, apparently reassured, that it was a matter of coding. Why did it not get to the truth of what was happening? Why was it that a year ago, the chief executive of the trust, who was responsible for what was going on, said:
	"We worked with the Strategic Health Authority and investigated this apparently high mortality rate and concluded that it was due to problems in the way we were recording and coding information about patients. We have, over the last year, employed more clinical coding experts"?
	He employed not doctors or nurses, but clinical coding experts. Why did the strategic health authority have the wool pulled over its eyes? Given that the then chief executive of that SHA, Cynthia Bower, has since been appointed by the Secretary of State to be chief executive of the Care Quality Commission, which will take over the Healthcare Commission's responsibilities in two weeks' time, is the Secretary of State confident that the CQC will intervene where necessary in future, and that it will be effective when it does so?
	When the Secretary of State passed to Monitor the application for this trust to be a foundation trust in the summer of 2007, one of his jobs was to assure himself that there was a good quality of care. Did he simply tick a box called "They've met the four-hour target in A and E" or was there any additional evidence? It should have been his job to know that the Healthcare Commission had initiated an investigation into the trust. Even if the Healthcare Commission did not tell Monitor, it was his job to do so, and there is an admission in the Department of Health documents that that should be part of the process.
	When the Healthcare Commission carried out its investigation, and wrote on 23 May 2008 requiring urgent action by the chief executive at the Stafford hospital, what did the Secretary of State and Monitor do about it? Why did they not intervene at that moment to remove the board and put in new management? It has taken us 10 months to arrive at that point. It was not simply the case that the events in question were historical, and that everything had been solved by then. The report of the Healthcare Commission says:
	"As late as September 2008, we found unacceptable examples of assessment and management of patients."
	The problems persisted and the board carried on. It is still in denial, and when Mr. Martin Yeates, the chief executive resigned, he said, among other things:
	"I am very proud of what we have achieved so far."
	The public in Staffordshire had a right to know what was going on, and the chief executive of their trust never told them what was happening.
	After Maidstone and Tunbridge Wells, the Secretary of State came to the House on 15 October 2007 and said:
	"we should be spotting these issues much earlier and getting rid of incompetent chief executives or chairpersons who, fortunately, are in the minority, rather than waiting for a report such as this, by which time, frankly, most of the damage has been done."—[ Official Report, 15 October 2007; Vol. 464, c. 571.]
	Where is there any evidence of early and effective intervention by the Secretary of State, his Department, the strategic health authority, which acts on his behalf, or the primary care trust, which also acts on his behalf? Why did that not happen?
	Will the Secretary of State acknowledge that constant organisational change, loss of financial control and an obsession with narrow process targets also contributed to the failure of this hospital, as they have in so many other places before, such as Maidstone and Tunbridge Wells and Stoke Mandeville? There is a systematic problem here. Will he ask the National Quality Board to look at the structure of targets so that it delivers on performance management and continuous improvement without the distortion of clinical priorities and clinical decision making, which has followed on from the application of the four-hour A and E target?
	Moving from targets to outcomes, devolving decisions to the front line, giving real information and choice to patients, listening to patients, and holding hospitals to account for their performance through competition are not just the policy changes needed; they are the essence of an NHS that does not just respond to tick-box, top-down targets, but responds to the real need of patients. Learning from what has gone wrong is the essence of understanding how to improve it in the future. When will the Government learn that lesson?

Alan Johnson: The hon. Gentleman makes a number of valid points, and one that I do not consider valid, which I will come on to.
	The hon. Gentleman's point about Julie Bailey and the Cure the NHS campaign was absolutely right. Indeed, I said in my statement that patients and staff raised concerns over a long period, and we can look at the number of complaints that went through the process. Let us remember that before the early part of this century, there was no independent regulator and no proper complaints procedure. A complaint would only have ended up in the trust—there was nowhere for it to go after that, and there were no statistics. Accident and emergency was a data-free zone. We can go back only about as far as 2001 to get any real indication of what happened.
	What we know is that in the three years 2005-06 to 2008-09, there were 43 complaints by patients at the hospital. That is not unusual, incidentally. What is unusual is that 32 of those complaints were upheld at the level of the Healthcare Commission, which is where complaints now go beyond the local trust.  [Interruption.] The hon. Member for Eddisbury (Mr. O'Brien) says that we have just stopped that. We can debate those issues, but it is very important to talk about what happened at Stafford. The hon. Member for South Cambridgeshire (Mr. Lansley) said that we have to know how this happened. He made a valid point about patient organisations, including Cure the NHS.
	As for why it happened, the hon. Gentleman made a valid point about the primary care trust. Actually, we have to put that in the plural—it was primary care trusts at the beginning. I believe that there were two or three before the reorganisation. Now there is one, but previously there were a number. The reason I am asking David Colin-Thomé to look at that as far back as 2002 is precisely that we need to know what the primary care trusts were doing. We need to know why the strategic health authority, too, was not picking up on the problem on behalf of its patients. That is a central feature of what the SHA and PCTs are meant to do as commissioners.
	All that we know—the hon. Gentleman will have seen this in the Healthcare Commission's report—is that there is a turgid argument about coding errors. It was pointed out by the Commission for Health Improvement in 2002, when it examined Stafford as part of a rolling programme of looking at every hospital in the country, that the system of collecting data was poor. That then seems to have become the major reason no one would examine what was actually happening to patients and patient care. The SHA commissioned Birmingham university to produce a report, which once again seemed to suggest that the problem was all about coding errors. We should pay tribute to the Healthcare Commission, which, having listened to that over and over again, refused to accept it and actually went in to see what was happening in the hospital.
	I do have confidence in the Care Quality Commission, not least because this House has given it greater powers than the Healthcare Commission has. Looking at what happened at Stafford, although no one knew it when we were debating the matter, there is no better argument for why those registration and other powers are so important.
	The hon. Gentleman asked when the information was passed to Ministers, and he made a point about how the Healthcare Commission could have tackled the problem much earlier. This was approved in the Department before I arrived— [Interruption.] Well, he asked me when I approved it, so I am just answering that I did not approve it; it happened before.
	The simple fact is that the approval was for a system that looked to the future. The consideration was whether the board had a strategy for the future—the hospital had a three-star rating from the Commission for Health Improvement—and whether it was capable of carrying it out. At that time, in June 2007, there was no indication of a Healthcare Commission inquiry. Indeed, the commission itself was alerted by the Dr. Foster figures in the summer and autumn of 2007.
	As far as the question about what the commission did is concerned, when it went in in May 2008 it had the ability, which Parliament had given it, to put that hospital into special measures immediately. That is the commission's decision, not ours. It is an independent regulator's decision to do that. What the commission did—I think it was the right thing to do—was not wait for 18 months until it had produced a report but immediately call the chief executive to a meeting and say, "There are serious concerns." Obviously it had to produce a report with recommendations, but it said that those concerns had to be tackled immediately. It states in its report that the trust did start to tackle those issues, although the hon. Gentleman is absolutely right to say that we have to be confident that there is not still a state of denial in the trust. I am still not confident about that, for some of the reasons that he gave. That is why I have asked George Alberti to go immediately and produce a report in five weeks.
	Where I take issue with the hon. Gentleman—I hope that Members of all parties will not use this turgid argument—is the idea that somehow this is to do with targets.

Evan Harris: That is what is in here.

Alan Johnson: The hon. Gentleman says from a sedentary position that that is in the report. No, the report says that staff—

Mr. Speaker: Order. The hon. Gentleman should not be saying anything from a sedentary position. A Minister is answering a case that has been put by the Opposition Front-Bench spokesman, and other hon. Members should listen.

Alan Johnson: Thank you, Mr. Speaker. This is an important point. Staff said in the Healthcare Commission report that their managers were pushing them on this issue, on the basis that they had to meet the target. However, I have just explained that A and E was a data-free zone. Horrendous things were going on there, including 12-hour trolley waits, that needed to be tackled. The argument made by the College of Emergency Medicine and the Royal College of Nursing is not that we should do away with targets. Indeed, the hon. Member for South Cambridgeshire himself said yesterday, in a very measured statement, that he has no problem with time limits—he did not use the word "targets"—but that they must never be used as an excuse to damage patient care.
	We must not let the management of Stafford off the hook through some suggestion that patients cannot be treated reasonably and quickly unless we do away with standards for patient care. There is no excuse for getting untrained receptionists to triage nurse, and there is no excuse, least of all targets, for leaving someone with a broken thigh bleeding in A and E for six hours without any attention. There is no excuse for the chronic understaffing that took place at Stafford. I therefore believe that although there may be an attempt to score a few political points here, to the people of Stafford targets are not responsible for what happened in that hospital. The problem was poor management and inadequate staffing.

David Kidney: The report makes it very clear that the care failings ran deep and wide. It is less clear why that performance attracted the highest, three-star rating and foundation trust status just last year. I put it to the Secretary of State that the big challenge now is to get that hospital performing to the right standard every day for every patient while totally reconstituting the trust. May I ask him to lead from the front and come to Stafford to meet people in the hospital and talk to the patients groups that he praised in his statement? Will he explain to us how he is going to stay involved as we make those changes?

Alan Johnson: My hon. Friend has written on several occasions about the situation at Stafford, as have other hon. Members of all parties over the years. I will be very pleased to come and meet the patients and the representative patients groups at Stafford, and I am keen to go through with them the various measures that I have set out today so that I can be assured that there is nothing else that we can do to put their minds at rest.

Norman Lamb: I thank the Secretary of State for early sight of the statement.
	We all recognise the full horror of what has been uncovered in the report—the gross neglect of patients and many dreadful and inhumane examples of poor treatment. Conditions were described by one relative as being reminiscent of the workhouse, which is a shocking comparison to make. There has clearly been an absolute dereliction of the duty of care, which should shock us all. Stafford is not a private hospital, for which we can all blame uncaring shareholders. This is the NHS, and that is what makes it so utterly shocking.
	I, too, pay tribute to the relatives who refused to be fobbed off and kept battling away, trying to get justice for their loved ones. It is the Government's absolute responsibility to ensure that we eradicate that sort of experience from the NHS. It must never happen again. In saying that, I am conscious that it was not that long ago that we considered the abject neglect that was found in Maidstone hospital. There are therefore repeated examples of those concerns.
	I hope that the Secretary of State will not only focus—rightly—on the culpability of those at the hospital, but face up to the possible wider causes and failures that led to the shocking scandal. So far, we have received an apology from him and the Government only for the failure of others. It is a strictly limited apology and further investigation is required.
	The Secretary of State has announced several specific steps that he wants to take, but will he agree to relatives' demands for a full, independent public inquiry into all the possible causes of the scandal and the vital lessons to be learned? Such an inquiry should consider the following matters. First, it should examine the need for justice for patients and relatives who have suffered so much. Secondly, it should consider the rigid operation of the four-hour target and the bullying that too often surrounds it—when one goes to hospitals and talks to emergency care practitioners, one hears that that plays a part. Doctors are told to divert from important care to treat people who are close to the four-hour target, and nurses have been threatened with the sack if the four-hour target is breached. It is extraordinary that the statement did not mention the four-hour target, given that the report refers to it.
	It beggars belief that the hospital was a three-star hospital, which secured foundation trust status despite all that we have heard was going on. Is that not reminiscent of Haringey council, with its three-star status as the baby P tragedy unfolded? Surely we need a review of the way in which hospitals are assessed in the light of the events. Although managers are rightly in the firing line, what about the clinicians working in emergency care? Clearly, there was appalling understaffing, but did anyone speak out? Should any clinicians be held accountable for what happened? Has anyone left the trust? Has anyone gone through internal procedures? Those questions need answers.
	We should also consider the role of the coroner, who failed to provide information about inquests, which would have been helpful. Surely that obstructed the investigation. What about the crucial role of the primary care trust and the strategic health authority? How on earth did matters go on for so long? The high mortality rate dates back to 2003—five full years—before anything was investigated.
	What of the role of Cynthia Bower? She was chief executive of the strategic health authority and she is becoming head of the Care Quality Commission. What about her predecessor, who is now chief executive of the NHS? Is there a conflict of interest—

Mr. Speaker: Order. Obviously, Front-Bench spokesmen get an allocation, but the hon. Gentleman has spoken for four minutes and I must consider Back Benchers and the fact that there is an Opposition day debate today. If the hon. Gentleman is about to wind up, that is fine, but he is taking liberties at the moment.

Norman Lamb: I am grateful for that guidance and I will wind up my remarks.
	The chair of the Healthcare Commission has talked of appalling standards of care and chaotic systems, which are intolerable. Will the Secretary of State instigate a public inquiry? Will he apologise if the conclusion of an independent inquiry shows that the culture of top-down bullying in enforcing rigid targets has played a part in the scandal?

Alan Johnson: I think that the hon. Gentleman is wrong to call for a public inquiry. We have a very good Healthcare Commission report, which underlines the difference between what has happened and the Bristol royal infirmary inquiry, which considered the position between 1984 and 1995, when there was no commissioner or independent regulator. There was no one to go in and examine the matter and no information. Now, the Healthcare Commission has provided an excellent report. We need to do more—that is why I said that events from 2002 to 2005 need to be examined. We need to be reassured that things are happening now. There needs to be an independent review of case notes and the National Quality Board needs to examine the alerts.
	The next stage review, which Lord Ara Darzi leads, appears esoteric in many ways, because it refers to each board having to produce a quality account as well as a financial account and it mentions quality metrics. It is not the stuff that gets people excited, but it is right. When we consider what happened at Stafford, we must move even further. Bruce Keogh, the medical director of the NHS and an eminent cardio-thoracic surgeon, said that there is a
	"moral, professional and social responsibility"
	on everyone in the NHS to know
	"what they are doing and how well they are doing it".
	That did not exist previously. The hon. Gentleman spoke about Maidstone, but there was no ability to have such reports previously. The Healthcare Commission's approach has done us proud, and I therefore do not believe that there is a need for a public inquiry.
	On what is happening in the trust and whether there is an issue about people on the board or clinicians, I stress that the board, which is now led by a new chair and a new chief executive and has a new clinical director, received the report officially only today. They must now go through due process. I want people to be treated fairly, with due process. The board will consider the report today and decide whether it needs to use internal procedures in the way the hon. Gentleman suggests.

Brian Jenkins: I thank my right hon. Friend for his apology on behalf of himself and the Government for what can be seen only as a tragic let-down for patients in the trust. The report often states that the trust board could—and did—ignore individual concerns. What will my right hon. Friend do about creating a mechanism that forces the board to answer individual concerns? Not only that, the concerns should be printed locally—that would reinforce the resolve of people who may want to formalise a complaint—so that we can see the scale of problem and bring pressure to bear locally. When can we, as individual citizens and patients, exert pressure on the trust boards?

Alan Johnson: My hon. Friend is right. The Healthcare Commission makes recommendations about what the trust must do, especially about the extraordinary fact that the board, when it met, dealt with only high-level stuff. It never received any complaints. To revert to an earlier point, the staff complained regularly. There was only one consultant in A and E when there should have been around four. There were three matrons in a hospital that now has 12 and should have had that number all along. Patients and staff made those complaints regularly, but they never reached the board.
	Of course, some high-level stuff needs to be examined, but the Healthcare Commission has also made some basic "how you manage a hospital properly" recommendations, which must be implemented. I am confident that the new management will do that.

William Cash: The Secretary of State was good enough to have a word with me yesterday about the appalling situation, which many hon. Members and the national press have thoroughly described. However, I revert to the question that I put to the Prime Minister about an inadequacy in the way in which the Government are handling the matter. I am surprised and appalled by it. So far, I have counted five separate reviews that they propose: a review of case notes—of course, that is important to establish culpability; the Alberti review, which deals only with A and E; the Care Quality Commission review, which raises questions about a conflict of interest, in that its inquiry will include an analysis of the role of the strategic health authority, in which the person who is now in charge of the CQC was involved; the PCT review; and that of the SHA.
	As the Secretary of State knows, I wrote to the Healthcare Commission many months ago. I pay tribute to Julia Bailey, Debbie Heseldine and Ken Lownds, who worked on the report—

Mr. Speaker: Order. The hon. Gentleman must ask a question. I have given him a bit of leeway; I got him in at Prime Minister's questions—he has done well today—but he cannot make a speech.

William Cash: I understand that, Mr. Speaker, but these are hugely important questions. Bringing all those matters together in one public inquiry, as we did in different circumstances back in 1984, with legionnaires' disease in the same hospital, should be very carefully considered. I strongly urge that we do that; otherwise we may miss the wood for the trees. May I say finally that—

Mr. Speaker: Order. No.

Alan Johnson: The hon. Gentleman has vociferously and persistently raised the case of concerned constituents. Indeed, he represented Stafford until 1997, so I listen with more than usual respect to what he says. The point about the case notes review is that no public inquiry or anything else can determine whether a patient died unnecessarily other than by having clinicians go through the case notes, so offering that to the loved ones of people who have died is absolutely right.
	The hon. Gentleman said that Alberti would deal only with A and E, but A and E is the problem. The Healthcare Commission has made the point that the issue was to do with one third of the patients coming into A and E and the emergency assessment unit. With the greatest respect, I do not think that a public inquiry will take us any further forward. Yes, there was a public inquiry into legionnaires' disease at the same hospital in '84, but there was no independent Healthcare Commission at that time. The Healthcare Commission has provided the report. To have a public inquiry on top of that would just delay moving forward on the issue, so with the greatest respect, I disagree with the hon. Gentleman.

Kevin Barron: Does the Secretary of State agree that having no reconfiguration of primary care, no change in the status of a hospital and no targets would take away the responsibilities that health professionals have to patients? Would he also be prepared to allow the findings of the case notes review to be reported to the regulatory bodies, if that is applicable?

Alan Johnson: I agree with my right hon. Friend on all those points. One reason standards have improved so dramatically is that we have proper measuring and independent regulation and we have set standards. The targets become standards as soon as they are achieved, and they have indeed been achieved. I also agree with the point about drawing to the attention of the regulator any information that emerges from the case notes review.

Michael Fabricant: These issues precede 2002. It is to my great regret that I was told by Staffordshire paramedics in 1999 that people would be far better off going to Burton than to Stafford. When I made inquiries about that, I was just fobbed off. What can the Secretary of State do now to reassure my constituents that Burton, Good Hope and other hospitals, as well as Stafford, are safe places to go to?

Alan Johnson: People have to look at what the Healthcare Commission says. The Healthcare Commission has looked at all the so-called outliers—hospitals that had a very high standardised mortality ratio—and it is assured that the problems are not the same as at Stafford. The Healthcare Commission has its own alert system, leaving aside the Dr. Foster system, in which five red lights, as it were, went off about care at Stafford hospital. That has not happened in Burton or other hospitals around the country.
	I find it inconceivable that what happened could have happened over such a long period, and the hon. Gentleman is absolutely right: it probably went on for much longer. The hon. Member for Stone (Mr. Cash) made the same point to me yesterday. However, we now have the procedures in place and we have the Healthcare Commission, and people can rest assured. Hon. Members in all parts of the House have to ensure that there is no hiding place for poor patient care.

Charlotte Atkins: Last week Bill Moyes of Monitor told me in the Select Committee on Health that the Mid Staffordshire NHS Foundation Trust met its criteria
	"in February 2008, after...a lengthy assessment."
	Does that not undermine the credibility of the foundation trust assessment process? Could the Secretary of State also give me an assurance that the proper patient care priorities of other hospitals, including the University hospital of North Staffordshire, will not be compromised by its determination to secure foundation trust status?

Alan Johnson: My hon. Friend raises an important point, which is central to the issue that we are discussing. I do not think that Bill Moyes or Monitor could have made any other decision. Let us not forget that the decision on Stafford was made before the Healthcare Commission decided that it needed to investigate. Yes, there were issues to do with the high standardised mortality ratio, but there are such issues in many hospitals. Once the Healthcare Commission decided formally to investigate on 18 March 2008, the hospital already had foundation trust status. Why did Monitor do that? It did so because the system looks at whether there is a proper strategy to implement.
	There are lessons for everyone to learn, but I will tell the House what Bill Moyes said last night:
	"we have certainly learned since our assessment of Mid Staffordshire that we need to look wider than we did at the time. At the time we tended to rely on other bodies to bring us information, whereas now we look at a whole range of issues about quality, including things like complaints".
	Apparently that was not previously in the system. We all need to learn from what has happened. I am not saying that Monitor or anyone else—and certainly not the Government—does not have lessons to learn, but the 115 foundation trust hospitals that have managed to achieve that status, to which many others aspire, are a world away from the awful events that were happening in Stafford.

Michael Howard: May I offer the Secretary of State a simple and constructive suggestion? Will he ask the chairman of every hospital's trust how much time its board has spent in the last year considering each of the following three topics: meeting Government targets; the status of the trust; and improving patient care? Would the answers to that question not help the Secretary of State as he tries to ensure that nothing similar ever happens again?

Alan Johnson: They would not, in the sense that the primary duty is to concentrate on patient care. That is the primary duty of all clinicians.  [ Interruption. ] Well, look, the worst mistake that we could make in this House would be to besmirch the whole of the NHS with what happened at Stafford, which was an absolute exception. I hope that the right hon. and learned Gentleman accepts that, because that is what the Healthcare Commission says. Anyone who has seen any NHS worker anywhere in the country who looks at what happened would be appalled. The chief executive of the NHS has today written to every trust board, drawing their attention to what happened at Stafford and asking them urgently to review the situation to ensure that they are doing the things that the Healthcare Commission has recommended Mid Staffordshire trust must do, which includes ensuring that patient complaints reach the board.

Tony Wright: This is a shocking and shaming report, as my right hon. Friend has said, but it is not a surprising one. My files are full of cases describing a lack of basic care at the trust. That is why I wrote to the Healthcare Commission asking it to look at the pattern of complaints and saying that I thought that they "highlighted systemic care issues". Now we know from this extraordinary sentence in the report that
	"the board did not routinely discuss the quality of care".
	We are talking about a trust that had sky-high mortality rates and sky-high levels of upheld complaints that did not even routinely discuss the quality of care at board level. That is beyond belief. The Government have now rightly put the quality of care at the top of the NHS agenda, but how can we be sure that that really happens everywhere in the country?

Alan Johnson: My hon. Friend's constituency covers Stafford hospital—he will shake his head if I am wrong—and once again I pay tribute to the work that he has done. The National Quality Board, among other things, will ensure that quality is central to everything that happens in the NHS—again, that came from the Darzi review. The process will involve presidents of royal societies and, crucially, patient representatives, as well as the regulators. They will be focused completely on ensuring the introduction across the country of quality metrics, CQUIN—commissioning for quality and innovation—and all the other terminology that is important to clinicians, so that quality becomes the organising principle of the NHS. It is their job to ensure that that takes place everywhere across the country. With that drive and commitment by clinicians, who were paramount in shaping Darzi's review, my hon. Friend can be assured that quality will indeed be the guiding principle and that, as I said earlier, there will be no hiding place for poor patient care.

Richard Taylor: During the years of deficit, strict vacancy freezes were put in place in all trusts. Will the Secretary of State reassure us that the vacancy freezes in Mid Staffordshire were not followed by a permanent reduction in nursing posts?

Alan Johnson: I can reassure the hon. Gentleman that there are no vacancy freezes. The Healthcare Commission has said that the hospital was drastically understaffed, and had been so for years. He is absolutely right to say that it had to move from deficit to surplus; it is quite right that extra money going into the NHS must be matched by trusts handling their finances properly, but that must never, ever be at the expense of patient care. It is obvious that this hospital was understaffed for many years, particularly in A and E.

Gordon Prentice: Doctors and nurses are in the first line of whistleblowers. I want to hear my friend say loud and clear that clinicians have a professional obligation to speak out loudly when things go wrong, and to take any concerns to their professional bodies. Why on earth did that not happen in this case?

Alan Johnson: My hon. Friend is absolutely right. It is one of the great mysteries of Stafford that, as far as we are aware, that did not happen. The Healthcare Commission has said that clinicians and staff gave up registering complaints at the hospital because they felt that they were wasting their time, but I cannot answer the question of why those complaints did not come up through a different route. My hon. Friend is right to raise it, but there is no answer to it in the Healthcare Commission's report. Perhaps one will emerge from the other reviews.

Jacqui Lait: I apologise to the Secretary of State for interrupting him earlier. I put it down to the fact that I was horrified by the tale that he was telling us. Will he tell us who was responsible for the appointment of the non-executive directors of the trust, who was responsible for the system of appointment for the non-executive directors, and what qualifications the non-executive directors had that gave them the skills to be non-executive directors?

Alan Johnson: It was the chair and chief executive of the trust, before it became a foundation trust, and now it is the governors of the trust who are responsible for appointing the board and for ensuring that the people whom they appoint as non-executive directors have the skills to do the job.

Clive Efford: Although I accept that the Government should always keep targets under review, does my right hon. Friend agree that it is utter nonsense to suggest that targets were at the heart of this problem, and that that is a reason for health professionals to neglect people who are in urgent clinical need? Does he think that replacing the word "targets" with the word "outcomes" would somehow alter the fact that we were measuring the performance in our NHS hospitals? Is it not right that we need to learn—

Mr. Speaker: Order. Hon. Members are supposed to ask only one supplementary question. There were three in there somewhere.

Alan Johnson: My hon. Friend is absolutely right—[Hon. Members: "Page 49."] Members are saying, "Page 49". I have read every page of the report that the Healthcare Commission has conducted and written. It says that targets cannot be used as an excuse for basic failures in management. Hospitals all over the country are getting waiting times down—the Conservatives had a target of 18 months in their patients charter—and it would be bizarre and perverse to say that, because this one hospital, Stafford, has been so appallingly managed and so understaffed, we will now take away the assurance that patients across the country have that they will be seen by a specialist within two weeks if they are suspected of having cancer, that they will wait no longer than 18 weeks for their operation, and that they will wait no longer than four hours in A and E. That would be ridiculous. It is a bizarre argument and I do not understand it. On the point about outcomes, I suggest that my hon. Friend read the leader in  The Times on Monday, which made the same point as eloquently as he did.

Douglas Hogg: Does the Secretary of State agree that there has clearly been gross incompetence by management and staff in this case? That raises the question of what happens in the public sector when gross incompetence occurs. Surely he will agree that it is important that disciplinary procedures should be commenced as rapidly as possible, that due process must be observed, and that those responsible should be disciplined—and, if necessary, sacked—and paid the minimum that the law requires.

Alan Johnson: The right hon. and learned Gentleman is absolutely right, but, as he said, this must be done through due process. I would expect that due process to be speedy and to come to a conclusion quickly, and neither I nor anyone else in the House wants to see any rewards for failure.

Rob Marris: The NHS overall does a great job. Stafford hospital is just a few miles from my constituency, and I am outraged at what has happened. The Secretary of State said in his statement today that "the management were obsessed with achieving foundation trust status". There have been far too many reorganisations of the NHS, both under this Government and under previous Governments. We have too many non-executive directors who are accountants, we have trust boards that are unbalanced, and we have too many senior managers in the NHS who are incompetent and not being fired. Will my right hon. Friend assure me that he and his Department will abandon the distraction of foundation trust status, which Wolverhampton is about to go through, and that he will try to ensure a better balance on trust boards so that we have fewer—

Mr. Speaker: Order. I must remind hon. Members of the practice of putting only one supplementary question to the House.

Alan Johnson: My hon. Friend has strong views about foundation hospitals, which I do not agree with. He was right, however, in his first comment. The NHS, which deals with 1 million people every 36 hours, does a terrific job up and down the country. He is falling into the trap of equating Stafford with everywhere else. There are 115 foundation trust hospitals that do a terrific job and whose standards are very high. They are part of the NHS, but it is quite right that they should have that extra freedom if they prove worthy of it. The important thing is that it should not only be financial competence that determines whether they are worthy of that status; it should also be their very important focus on patient care.

Evan Harris: Seven years ago I warned the Secretary of State's predecessors and the hon. Member for Woodspring (Dr. Fox) that these political targets would result in clinical distortions. Does the right hon. Gentleman accept that this hospital was a three-star trust and a foundation hospital under his Government's target metrics? Surely he cannot simply blame the managers, when they were told that they would lose their jobs unless they met the Government's priorities. According to the managers, these were P45 targets, and the Secretary of State cannot simply blame them for what has happened.

Alan Johnson: What the hon. Gentleman says about targets is stuff and nonsense. There is a debate about this issue. The Royal College of Emergency Medicine and the Royal College of Nursing think that targets are right. They think that the tolerance levels involved should be 95 or 96 per cent., rather than 98 per cent, but to turn Stafford into a technical argument about three percentage points is perverse, and it is unworthy of the report that the Healthcare Commission has produced.

David Drew: I am a foundation trust governor in my acute hospital trust—

Rob Marris: Sell-out!

David Drew: There you go: there's an admission! If the model is used properly, and if governors are empowered, it offers by far the best method of accountability, despite political differences. Is it not about time that we had faith in this model and empowered the governors, so that we can prevent the Staffords of this world from happening again?

Alan Johnson: I believe that my hon. Friend might have shared the view of my hon. Friend the Member for Wolverhampton, South-West (Rob Marris) at the time when we were having the debate about foundation trusts. However, he now speaks very eloquently from his experience of the trusts, and I think that he is absolutely right.

Anne McIntosh: Will the Secretary of State take this opportunity to assure the House that there are no systemic failures in the NHS system, and that his Department's regulations are not taking every ounce of initiative and flexibility away from the health professionals? For instance, if a patient is not eating at meal times, families are not allowed to visit in order to feed the patient. Is not that nonsensical? Can we not reintroduce a degree of flexibility into the arrangements, and trust the health professionals to allow what is best for the patients in their care?

Alan Johnson: I think that the hon. Lady has a particular incident that she wishes to speak to me about, and I would be very pleased to talk to her about it. I can reassure her that there is no systemic failure in the NHS, on any model. Of course, we now judge this independently; we have independent statistics. We have the Dr. Foster statistics, which are used only in this country, Canada and the United States. They are not hard and fast—there is a debate in the  British Medical Journal this morning about them—but they are a very good indicator of when there is a problem in a hospital. These things never occurred before. Anyone who reads the report of what was happening at Bristol royal infirmary—in a data-free zone and without resort to independent regulation—will see that we have moved on a great deal since those dark days.

Young People Leaving Care (Accommodation)

Motion for leave to introduce a Bill (Standing Order No. 23)

Helen Southworth: I beg to move,
	That leave be given to bring in a Bill to make provision for minimum standards in respect of accommodation for young people leaving care; to impose a duty on local authorities to ensure that such standards are met; and for connected purposes.
	This Government have made massive progress in bringing in legislation to protect children and they have given a special focus to identifying and supporting children who are at risk of harm. The Children and Young Persons Act 2008 includes radical measures to improve the experience of young people in care, to deliver high-quality corporate parenting, to listen and respond to young people, to bring stability and continuity into every aspect of child care and, perhaps most of all, to create an uncompromising culture of high aspirations.
	The Bill supports the high aspirations of the Children and Young Persons Act 2008. When a young person's accommodation is changed from a placement in a regulated setting—that is, a children's home or foster placement—to one that the Act refers to as "other arrangements" that are not regulated under the Care Standards Act 2000, the Bill will ensure that statutory minimum standards are in place to determine whether such accommodation is suitable.
	It has been suggested that this Bill is not necessary because the regulations and guidance relating to the Children (Leaving Care) Act 2000 already place a general duty on local authorities to ensure that they provide suitable accommodation to care leavers. Certainly, a number of local authorities have developed exemplary good practice in supporting care leavers, including minimum standards to determine suitability, which they apply locally. The current framework should ensure that all care leavers are being placed in suitable accommodation that adequately meets their needs. In fact, however, the evidence from care leavers themselves and their care workers shows that in far too many cases it is not working. If the guidance from 2001 is not yet working and vulnerable young people are being placed at risk, we must conclude that a step change is needed—and it is needed now.
	The National Care Advisory Service reports that 10 per cent. of care leavers feel unsafe and 44 per cent. worry about their safety. The Rainer "Home Alone" report gives case studies of the actual experience of young care leavers, so I shall cite some. For example, it states:
	"There are serious problems with drug use amongst the other tenants. It's hard for Dan as he's struggled with that in the past and is trying to move away from it".
	In another case, it is stated:
	"The room was on the very top floor, up a few flights of steps. It's really difficult to manage every day with a young daughter and a buggy. There were no cooking facilities, no food allowed in the room."
	In another case:
	"There were large amounts of rubbish and discarded food, with flies everywhere."
	In another:
	"He felt uncomfortable even using the bathroom to wash. An older resident made inappropriate sexual advances to him and he still received no support. Eventually he was moved after being found unconscious in his room."
	Furthermore:
	"There was frequent harassment and discrimination from other tenants. The worst example saw her burgled and her pets were killed"—
	and this relates to a girl who left care aged 16 after six and a half years as a looked-after child.
	These are further cases:
	"She's 25 miles away from all of her support networks, including the leaving care team and her social worker. She doesn't know anyone in the local area so she feels very isolated";
	"He couldn't sustain the training placement that he'd won because of where he moved to and the distance involved";
	"The local housing department wouldn't let Paul bid on a property until he reached 18 but he had to move out of his 'moving on flat' before his 18th birthday. So he had to move into temporary accommodation—a hostel—while they sorted things out. This was a major backwards step for someone who was doing well at living independently. The hostel was also in a different town which jeopardised his employment".
	In his 2006 report on young people's views on leaving care, the children's rights director says:
	"Young people spoke of having to wait months or longer, in local bed and breakfast accommodation, before the promised flat became available. A number of young people raised concerns about whether accommodation arrangements for care leavers are always sufficient to keep them safe from harm. Young people reported that they are given flats that are unclean and situated in bad areas".
	He also said:
	"Many were keen to make the point that their accommodation was filthy and that they did not feel particularly safe or secure. Other young people expressed concern at what they described as being forced to share residence with adults and other young people who they said they would never have been allowed to mix with whilst in care".
	More recently, the experiences described to the associate parliamentary group on looked-after children and care leavers confirm that far too many young people are still being moved from care into unsuitable accommodation.
	Part of the problem seems to be that what constitutes "suitable accommodation" in relation to care leavers is not described in any detail. By comparison, the "fitness of premises" requirements for children's homes under the Children's Homes Regulations 2001, issued under the Care Standards Act 2000, give detailed specifications that accommodation must be the following: adequately lit, heated and ventilated; secure from unauthorised access; of sound construction and kept in good order; equipped with what is reasonably necessary and adapted as necessary in order to meet the needs arising from the disability of any disabled child.
	Under those regulations, there must also be conditions of appropriate privacy and sufficient washing and toilet facilities; sufficient and suitable kitchen equipment; adequate facilities for the preparation and storage of food; adequate facilities for laundering linen and clothing; space for sitting, recreation and dining and for private study; sleeping accommodation that is suitable for needs, including for privacy; and appropriate furniture, storage facilities, lighting, bedding and other furnishings, including suitable window and floor coverings. Furthermore, premises may not be used for the purpose of a children's home unless they are in a location and of a physical design and layout suitable for the purpose of achieving the aims and objectives set out in the homes statement of purpose. Children's homes are also inspected to ensure they meet these and other standards. Once a young person leaves a home or foster care to live in other accommodation, however, the guidance of suitability becomes extremely broad-brush, and there is no independent inspection.
	The purpose of the Bill is to sort out those problems by providing clear, simple minimum guidance—nothing bureaucratic or over-sophisticated, just the sort of simple guidelines that any decent responsible parent would ensure were in place for their child if they were looking for suitable accommodation. A lot of the work to identify standards has already been done—for example, with student accommodation where national codes of practice have been agreed, covering transparency of charges, responsibility for repairs, health and safety requirements, security, environmental standards and tenant relations. All should be specified in detail and there should be a requirement that contracts for tenancies are fair.
	Foyers, which supports more than 10,000 young people each year—16 to 25-year-olds in housing need—has a lot of experience in this area. The Foyer Federation has developed an accreditation process with quality standards to ensure that accommodation is affordable accessible, safe, well maintained and appropriate to needs, and meets the needs for independence, privacy and dignity, security and health and safety.
	The majority of young people choose when to leave home—perhaps to go to college or university, to take up a job or to move in with friends or a partner. Most of them decide when they want to leave and have a support network to back them up, and family to help them out and a home to go back to if they want. The average age at which people leave home is 24, but young people leaving care are more likely to be vulnerable and without access to family support. They are more likely to leave at a much earlier age. Last year, 24 per cent. of care leavers left care at 16, and 15 per cent. left at 17. They often have to face a huge number of changes all at once, and all too often have to deal with them without any support or help from a family, and they have nowhere to go back to if things do not work out for them.
	With just a small effort from this House—it is a corporate parent and has a duty of care to these young people—we could make a huge difference to outcomes. We have to make sure these young people have accommodation and support that is suitable for them and meets their needs. We need this Bill, so I ask the House to take it forward.
	 Question put and agreed to.
	 Ordered,
	That Helen Southworth, Ann Coffey, Dan Norris, Mr. Barry Sheerman, Mr. David Kidney, Rosemary McKenna, Mr. Kevin Barron, Derek Twigg, Hilary Armstrong, Mr. Mike Hall, John Bercow and Annette Brooke present the Bill.
	Helen Southworth accordingly presented the Bill.
	 Bill read the First time; to be read a Second time on Friday 19 June and to be printed (Bill 77).

David Davis: On a point of order, Madam Deputy Speaker. We are about to have a major debate on the economy. At 12 noon today, the Treasury published Lord Turner's report on the causes of the current problems in the economy. As of three minutes ago, the report is not available in the Vote Office. It strikes me as outrageous that the Treasury has not made arrangements to let us know what is going on in its policy formulation.

Madam Deputy Speaker: The right hon. Gentleman's point will have been heard by Members on the Treasury Bench, and no doubt arrangements to make the report available are now in hand.

Opposition Day
	 — 
	[8th Allotted Day]

The Economy

Madam Deputy Speaker: I must announce that Mr. Speaker has chosen the amendment in the name of the Prime Minister.

George Osborne: I beg to move,
	That this House condemns the fact that, nine months into a recession, Government policy is failing to tackle the deepening economic crisis; notes that the measures announced months ago, including the Working Capital Scheme, the National Internships Scheme, the Asset-Backed Securities Guarantee Scheme, the Homeowners Mortgage Support Scheme, the car manufacturers' finance guarantee and the Recruitment Subsidies Scheme, have not yet been implemented; questions whether there is any evidence at all that the temporary cut in value added tax has succeeded; notes with concern that the value added tax cut has added to a rapidly deteriorating fiscal position, and that Government debt is likely to double by 2013; calls on the Government once again to implement what was promised, to get credit moving by introducing a National Loan Guarantee Scheme, to take tax measures in order to help savers and to take other measures to help small businesses; and further calls on the Government to start addressing the long-term causes of the current crisis, including a build-up of government, corporate and personal debt which has left the UK more exposed than other countries, and to develop the required long-term reforms of the tax system, the failed tripartite system of regulation, and the public sector, so that in future Britain lives within its means.
	As we heard during Prime Minister's Question Time today, we have just seen the fastest monthly rise in unemployment on record, worse than any monthly figure during the 1980s or the 1990s. Vacancies are at a record low—which used to be the Government's excuse on days such as this—while 2 million people are out of work, and of course the numbers climb steadily. We have also learnt today that the International Monetary Fund has produced new growth forecasts for the world, which show that Britain is set to be in recession for longer than any other major economic area. Indeed, the IMF predicts that the British economy will be the only major economy to contract next year, 2010, when the economies of America, the eurozone and Japan are all forecast to be growing again.
	As my right hon. Friend the Member for Haltemprice and Howden (David Davis) has just said, Lord Turner has published his report— [Interruption.] I was sent a copy in advance, so I did not need to go to the Vote Office. However, it says something about co-ordination in the tripartite committee that the committee could not convey the report to other Members.

Tom Levitt: Will the hon. Gentleman give way?

George Osborne: I will give way in a while, but may I be allowed to say something about the report first? It offers a pretty devastating critique not just of the regulatory system created by the Prime Minister in 1997 but—this is in the first half of the report—of a model of economic growth that was based on unsustainable debt, over-leveraged banks and a huge macro-economic imbalance.
	One would have thought that the Chancellor of the Exchequer, who commissioned the report and whose policies are deepening the recession, would be here to debate the economy and defend his approach, but apparently not. We have not had a debate on the economy in Government time since December, and the Government have known about this debate for two weeks. When we suggested it, we were told that there was no pressing international summit or unbreakable commitment that would require the Chancellor's absence. There is only one conclusion to be reached: the Chancellor of the Exchequer is running away from the debate because he knows that he is losing the debate. A confident Government, and a Prime Minister who meant what he said about restoring the primacy of Parliament, would have relished the chance for the Chancellor to appear before us today.

Tom Levitt: I note that the shadow shadow Chancellor is not here either.
	The hon. Gentleman opened his speech with a reference to unemployment. Why is there no mention of unemployment in his motion? Is it because, as I suspect, the Tory view is still that unemployment is a price worth paying?

George Osborne: First, our motion refers to the various unemployment and employment schemes that are not operational. Instead of simply taking the Whips' handout, the hon. Gentleman might actually read the Order Paper. Secondly, may I give him some advice? I know that he has been in Parliament since 1997, and he has been taking these handout questions since then. He is still not on the ministerial rung, and he only has a year to go. Why does he not change tack, and be a bit more critical of the Government?

Chris Ruane: Will the hon. Gentleman give way?

George Osborne: It is normally a mistake to give way to the hon. Gentleman, but I will.

Chris Ruane: Does the hon. Gentleman agree that the big difference between this recession and the last one, which took place under the Conservatives, is that under the Tories interest rates were at 15 per cent., whereas in the present recession they are at only 1 per cent.?

George Osborne: The difference between this recession and the last one is that we have just seen the highest rise in unemployment on record, and it happened today.

Michael Howard: Would not the hon. Member for High Peak (Tom Levitt)—and indeed the Prime Minister, earlier today—have been well advised to read the Government amendment before making the point that they made, as the amendment also contains no reference to unemployment?

George Osborne: As ever, my right hon. and learned Friend's razor-sharp attention to detail has enabled him to make a telling point.
	So we do not have the Chancellor of the Exchequer. Instead, we have the Chief Secretary to the Treasury. I know that she is not exactly busy these days. I am not sure what the role of a Chief Secretary is in a Treasury that has completely given up any attempt to control public expenditure.
	Yesterday, the Prime Minister announced in an interview in  The Guardian—not to the House of Commons, of course—that there would be no spending review at all this year. The whole panoply of comprehensive spending reviews and three-year plans that we have had from the Prime Minister over the last 15 years has been junked without a word of explanation to Parliament or the public. If somebody does not review spending when they have the biggest budget deficit in the country's history, they really must have abandoned all the basic responsibilities of government. On the plus side, however, this means that the Chief Secretary has more time on her hands—more time to plan her budding leadership campaign, of which we read in the newspapers, and more time to join us here. We welcome her to her place.
	The case that we make today is simple. First, the Government's policies to tackle the recession are simply not working—literally so, in the case of the many schemes that still exist only in the form of a press release. Secondly, the Government have not yet faced up to the fundamental failure of the debt-fuelled model of economic growth which their Prime Minister pursued for a decade, and which has led us into the longest recession in the world and the deepest recession in our recent history. Or as the right hon. Member for Norwich, South (Mr. Clarke)—always a friend of the Prime Minister—put it just this lunchtime on television:
	"There are many aspects of our economy that put us in a worse position".

Patrick Hall: rose—

George Osborne: Does the hon. Gentleman agree with his colleague?

Patrick Hall: It is for the hon. Gentleman to answer for his party.
	According to the hon. Gentleman's motion, we are
	"nine months into a recession".
	That means that the recession started last July. During Prime Minister's Question Time, however, the leader of the hon. Gentleman's party said that it had started in April—12 months ago. Could the hon. Gentleman help to resolve the apparent confusion in the Conservative party?

George Osborne: That was a staggeringly poor intervention. First, the Leader of the Opposition said that the economy had not been growing for a year, and I think the hon. Gentleman will find that there was zero growth in the second quarter of last year. Secondly, if he wishes to trade quotations of what was said during Prime Minister's Question Time, I point out that the Prime Minister said that America had entered the recession before the United Kingdom, and it experienced positive growth in the second quarter of last year. No doubt the hon. Gentleman will be writing to his right hon. Friend to correct him as well.
	The case we will make today is simple: the schemes are not working and the Government have not faced up to the fundamental flaws in their model of economic growth.

Clive Efford: rose—

George Osborne: If the hon. Gentleman will allow me to make a little progress, I shall give way to him later—and, perhaps, hear whether he supports what Ken Livingstone has been saying about the Prime Minister today. I will give the hon. Gentleman some time to think about that. We might also hear about what the Member sitting next to him, the hon. Member for Dagenham (Jon Cruddas), has written in  The Guardian today about how new Labour has lost its spirit of generosity and lost touch with the people of this country. While the hon. Member for Eltham (Clive Efford) reflects on that, let me say this— [Interruption.] May I just add that we support the campaign of the hon. Member for Dagenham for the leadership of the Labour party?
	A lot of attention has been given in recent weeks in this House, and especially in the media, to the repeated bail-out of the banks and the forthcoming G20 meeting, and I will discuss those on a later occasion, but what I want to draw to the House's attention today is the failure of the policies that, in the Government's words, are supposed to be providing "real help now" to families and businesses struggling with the recession. That slogan of "real help now" is a cruel joke to thousands of people who have lost their jobs, and continue to lose their jobs, while this Government dither and delay.

Clive Efford: The hon. Gentleman has talked about what works and what does not work. Can he explain how cutting inheritance tax for the richest 3,000 people, at a time when we are in one of the deepest recessions in the last 100 years, will help ordinary families who are struggling to survive through this recession?

George Osborne: My memory of the autumn of 2007 was that I proposed some changes to inheritance tax that the hon. Gentleman's Government then copied about a week later. In commemoration of that occasion, I was sent a cartoon by a Labour MP showing the Chancellor and the Prime Minister climbing through a window to steal my policies from my office. Therefore, if the hon. Gentleman has a complaint, please will he take it up with those on his own Front Bench?

Doug Henderson: Setting aside the political rhetoric— [Interruption.] I think we have heard a lot of that today. Setting aside the political rhetoric, does the Conservative party accept that as part of any fiscal stimulus internationally, it is inevitable in this country, as in other G20 countries that both debt and borrowing will be a higher percentage of GDP, rising in every advanced country above the 3 per cent.? If the Conservatives do accept that, what is their strategy for tackling Britain's position?

Chris Ruane: He can't answer that.

George Osborne: Well, I can actually. The answer to the question is as follows. Of course, in a recession Government debt increases—and, by the way, when we go into a recession with a 3 per cent. Budget deficit, it is likely to increase above that in the recession, because tax receipts fall off and welfare payments increase. Those are the fiscal stabilisers, and that provides a fiscal stimulus. That was a debate that was had in this country and many others over many decades since the 1930s. We have not proposed in any way to tamper with the fiscal stabilisers. What we opposed was the debt-funded discretionary cut in VAT. The question that Labour Members have to ask themselves is this: have they got any evidence that that has in any way stimulated the economy or encouraged anyone to spend any more money? Every single major retailer has come out and said that it was a waste of money and it has not worked. The one thing we can be sure of is that it has, in a discretionary way, added to a very significant borrowing problem, and the shocking figure we will get on Budget day will be the size of the fiscal deficit that this Government are saddling this country with for many years to come. It will be the highest in our history, and the Labour party's reputation for economic incompetence is not only apparent for all to see today, but it will be hung around their neck for a decade to come.

Andrew Love: The Institute for Fiscal Studies commended the VAT cut in its "green Budget" as bringing expenditure forward. I want to ask the hon. Gentleman a question on economic competence, however. Is it competent in the midst of a recession to be talking about public sector cuts?

George Osborne: Again, the hon. Gentleman would do well to look at what we have actually proposed. We have proposed reducing the real growth in spending from 3.4 per cent. to 2.6 per cent., which means that public expenditure will grow by £25 billion next year instead of £30 billion, and using that £5 billion to help the millions of savers and pensioners who have been penalised in this recession—who did the right thing for the last 10 years and have been punished for it. That is a perfectly sensible allocation of resources.

Several hon. Members: rose —

George Osborne: I shall give way to my right hon. Friend the Member for Wokingham (Mr. Redwood) and my hon. Friend the Member for Bournemouth, East (Mr. Ellwood), and then I shall make some progress.

John Redwood: My hon. Friend is making an extremely powerful case. Does he agree that another big hazard for us is that, because the Government have clumsily blundered into giving too much money to banks, taxpayers are now at massive risk and are standing behind grotesquely large remuneration packages and pensions for some who have failed, and that the Government should have been a lot tougher in their support and much more careful in what they did?

George Osborne: Of course I agree with my right hon. Friend, and the tale of Lord Myners and Sir Fred Goodwin's pension should ring around the country as an example of how this Government are completely incapable of looking after taxpayers' money. It is a miracle that Lord Myners survives in the Government, and it says something about the judgment of the Prime Minister that he put him there in the first place.

Tobias Ellwood: My hon. Friend talked about the importance of helping businesses. The one initiative that has made its way to Bournemouth is a seminar called "Employing People from Overseas Countries", which has been paid for and run by the Home Office. At the seminar, people can learn about step-by-step visa applications, biometrics and the new points system. This is the only initiative that has got to Bournemouth. Is this really the way for us to tackle unemployment in this country?

George Osborne: Well, it does sound a little inconsistent with the Prime Minister's slogan of "British jobs for British workers".
	My hon. Friend brings me on to the subject of Government schemes, which I want to touch upon now that I have taken those interventions. Four months ago, we argued from this Dispatch Box that the urgent priority was to get credit flowing again to businesses large and small, so that they stayed afloat and people were kept in work. We proposed a national loan guarantee scheme as a big, simple and bold answer to the problem that everyone, from the Governor of the Bank of England to the head of the CBI to the trade unions, had identified as the most important problem facing British business. We also said that to help with the cash flow of smaller businesses while they wait for that credit, we should allow them to defer their VAT bills and we should reverse the rise in their small companies tax rate. To help the unemployed get back to work, we suggested a national insurance rebate for any employer who took them on. At the time, the Government—particularly the Prime Minister—of course dismissed every single initiative out of hand. Now, four months later, they are struggling to introduce them.

Chris Ruane: rose—

George Osborne: I will give way after I have got through this section of my speech.  [Interruption.] This is about the hon. Gentleman's constituents—it is about the many thousands of people in all our constituencies who are losing their jobs. Businesses are going bust because Government schemes that were promised have not been implemented.
	Let us look at the working capital scheme—no doubt the hon. Gentleman was among the loudest cheerers when it was announced from the Dispatch Box. It was proposed on 14 January and launched in a blaze of publicity. The Business Secretary said at the time:
	"There will be real results from the schemes that go live today."
	Two months later, that scheme does not exist. The date when it was supposed to be up and running came and went weeks ago. The negotiations with the banks are still continuing, and in the meantime good businesses are going bust and good people are losing their jobs.
	That is not an isolated example of the incompetence of this Government. The automotive assistance programme is supposed to help the car industry. Two months after it was launched, there is no evidence yet that a single car manufacturer has been helped. Earlier this week, the Department for Business, Enterprise and Regulatory Reform floated the idea of a car scrappage scheme. Today, the Treasury is briefing the media that it is not in favour of the scheme—That one did not even last a week. My hon. Friends will recall that the home owners mortgage support scheme was announced by the Prime Minister in the Queen's Speech debate, yet we are now in March and that scheme does not exist; the number of repossessions is rising, thousands are losing their homes and not a single home owner has received support. What about the national internship scheme, which was announced three months ago? I can find no record of that scheme anywhere—it has completely disappeared without trace. Perhaps the Chief Secretary to the Treasury could tell us what has happened. Ministers cannot distinguish between getting a headline on the "Today" programme and actually making sure that the schemes they promise are implemented and are working, but the public can and this is causing widespread disillusion and despair.

Oliver Heald: My hon. Friend is making such a strong case. Does he agree that one of the real dangers of delay is that rising unemployment will simply overcome all these efforts, as consumer confidence falls and the chances of rescuing these businesses and saving jobs are lost?

George Osborne: I completely agree with my hon. Friend; we are facing a very severe rise in unemployment. The tragedy is that if some of these schemes, particularly the credit and guarantee schemes, had been in place months earlier, some businesses could have been saved and some of those people could have been kept in work.

Angus MacNeil: The hon. Gentleman is discussing a long list of Labour's, and in particular the Prime Minister's, broken promises—the Prime Minister is going to introduce £1 billion of cuts in Scotland, in addition to everything else that is happening there and in Northern Ireland. May I remind the hon. Gentleman about last week's Prime Minister's questions? The Prime Minister told the hon. Member for Macclesfield (Sir Nicholas Winterton) that he would be
	"happy to debate the economy at any time in this House".—[ Official Report, 11 March 2009; Vol. 489, c. 292.]
	Could it be that the Prime Minister is somewhat less happy this week?

George Osborne: For once, I agree with the Scottish nationalists—perhaps there will be many other such occasions in the future. The hon. Gentleman rightly says that the Prime Minister said that he wanted to debate the economy, yet he will not even send the Chancellor of the Exchequer to debate it today.
	I know that many hon. Members will raise constituency cases in this debate, but I just want to read a letter that I have received from a constituent of mine, because I think it touches on a wider national issue. The letter states:
	"Dear Mr Osborne
	I am writing concerning an article which was published in The Times...The article was entitled 'White-collar workers to get special help as jobless hits 2m'...I have recently become unemployed and am keen to undertake some training to extend my skills so this"—
	scheme—
	"would be ideal. Unfortunately, no one at the local JobCentre (including their management team) has been told about either scheme and they were...totally unaware of the article. This lack of information reflects badly on the JobCentre staff which is unfair as, for the most part, they are doing a good job under very difficult circumstances."

Chris Ruane: Signed David Cameron.

George Osborne: Again, the hon. Gentleman is making light of the fact that thousands of people are losing their jobs. He is making light of the fact that someone who has lost their job went to the jobcentre clutching an article that they had read in  The Times about a Government scheme that had been launched only to find that the jobcentre knows absolutely nothing about it. That is why in a year's time the hon. Gentleman will be the one losing his job.  [Interruption.]

Madam Deputy Speaker: Order. If hon. Members wish to intervene, they know the method that they must use.

Rob Marris: rose— The very end of the Opposition motion refers to the country living "within its means", and that has an impact in terms of savings. At the moment, there is a 10 per cent. return from the capital rule for savers who are pensioners in terms of benefits. Many of us think that that 10 per cent. is unrealistic now. If the shadow Chancellor agrees, would he indicate the level to which he thinks that percentage ought to come down?

George Osborne: I agree with the hon. Gentleman that the way in which many of the benefits and the pensions operate makes assumptions about returns from capital that are totally unrealistic in the modern environment, with its near zero interest rates. I think that we will find many examples like the one that he raises. He makes his point very seriously, and I shall go away and give it full consideration and come back to him on it. He will find as we go through this year that there are many examples of how the prospect of deflation interacts in a very odd way with the benefits system to which we have got used.

Shailesh Vara: This morning, I received a reply from the Minister with responsibility for higher education saying that, since 2007, career development loans provided by banks are down by a third. These are the career loans for people, mostly young people, who have suddenly found a halt to their careers. Does my hon. Friend agree that this is yet another example where the Government's policies simply are not working and the money is not trickling through to the public?

George Osborne: My hon. Friend is right; there are numerous such examples, some of which I have raised. One has only to listen to what the Minister for Employment and Welfare Reform was saying just a couple of hours ago in order to realise this. He acknowledged that
	"there is a frustration about these"—
	Government—
	"schemes and the money and the credit getting through."
	That is the Government's Employment Minister acknowledging frustration about the Government schemes that were promised and not delivered. That brings me to the second point that I wish to make.

John Butterfill: Does my hon. Friend agree that it is very worrying that one of Bournemouth's leading construction and engineering companies has written to me saying that it has tried to get one of these guaranteed loans, but the banks will accede to that only if the directors give a personal guarantee? That negates the whole objective of guaranteed loans, does it not?

George Osborne: My hon. Friend is absolutely right. The whole purpose of these guarantees is to try to get the money out of the banks and into businesses. We were told that the recapitalisation in October would achieve that, but it failed. That is why we needed a national loan guarantee scheme. The examples that we are hearing about today—there are countless other such examples around the country—are examples of how the Government are failing to deliver on the promises that they have made to the public and are failing to deliver on their basic duty to help people in this recession.

Michael Jack: rose—

Geoffrey Robinson: rose—

George Osborne: If both distinguished former Treasury Ministers—to varying degrees of distinction—will allow me, I shall make a little progress. I know that lots of hon. Members wish to speak, given that we have not had a debate on the economy since December. I am sure that the hon. Member for Coventry, North-West (Mr. Robinson) will wish to tell us all about how successful the Government schemes for the car industry are proving at the moment.
	Let me deal with the second major question: do the Government understand that the model of debt-fuelled growth that they pursued for 10 years is fundamentally broken and needs to be fixed? Judging from the Prime Minister's increasingly contorted answers to the questions of blame, the answer is no—indeed, his answer seems to amount to, "I'm sorry I didn't get other leaders to agree with me earlier." That is not much of an apology. He, alone in the country, still maintains that there was nothing wrong with the British economy and with the way in which he regulated financial services in the country, and that we are simply the unwitting victims of a recession that came from America. That is his argument, although I note that he left it out of his speech to the American Congress—I guess that speech will not be appearing in the next edition of "Courage".
	The problem with the argument that the recession came from America is that it does not explain some basic facts. Of course there has been turmoil in the world financial system and huge problems in America, but was it America that caused British families to become more indebted than American families or that caused British house prices to rise twice as fast as US house prices? Was it America that caused British banks to lever up 37 times their capital—almost double the leverage of their US counterparts? Was it America that gave Britain the largest budget deficit in the developed world? Was it an American politician who said with the hubris of "peace in our time" that he had "abolished boom and bust"? No, it was a British politician. The Turner report, which was published at midday, blows apart the Prime Minister's claim that all was well with the British economy until we were hit by a transatlantic storm. It supports the Conservative argument that the problems in the British economy are deep-seated and that the model of growth pursued over the past decade is fundamentally broken.

Laura Moffatt: Where were you?

George Osborne: I was opposing the Government, whereas the hon. Lady was supporting them.
	Page 29 of the report talks of the
	"rapid credit growth in the UK household sector in the decade running up to 2007".
	It discusses the "major and continued macroimbalances" that built up in the UK and says that
	"the UK experienced a credit and property cycle similar to that seen in the US".
	The trigger may have been pulled by US sub-prime, but the gun was loaded here in the UK. The failure to fix the roof when the sun was shining was a British failure and a Labour failure. Until the Prime Minister understands the mistakes that we made in creating an economy built on debt, there is no prospect of the Government leading a lasting and meaningful recovery.
	What needs to be done? We need to shift the corporate tax system away from encouraging debt towards supporting equity and new investment—not a word from the Government on that. We need to provide new start-up capital for the businesses that we want to see emerge from the ashes of this recession—not a word from the Government about plans to do that. We need to make changes to the personal tax system, so that pensions and savings are supported, not penalised—not a word from the Government about how to do that.
	I urge the Government to act in the coming Budget to help pensioners and savers and adopt our proposals to abolish income tax at the basic rate for savers and increase the pensioner personal tax allowance so that those innocent victims of this recession are helped.
	We have heard nothing from the Government, not even from the Chief Secretary herself, about what will take the place of the three-year spending plan and the fiscal rules that were supposed to be the centrepiece of Budget policy. We have proposed an office of budget responsibility, so never again can a Government borrow recklessly in a boom and leave our country so exposed when the economy turns. The Government have no answers to any of these things. Indeed, the Prime Minister will not even accept that the system he created 12 years ago for regulating banks needs changing.
	When we asked James Sassoon—the man who actually advised the Prime Minister, when he was the Chancellor, and who sat as his representative on the tripartite committee for years—to reflect on his experiences, think about what had gone wrong and propose reforms to the system of regulation, the Prime Minister rejected them out of hand without even reading the man's report.
	Today, Lord Turner too has proposed major changes to the system of financial regulation, and I support some of them but have doubts about others. However, yet again, the Prime Minister is not engaging in the debate. He is not even prepared to admit that there is a debate to be had about whether we return to narrow banking. He has dismissed that without allowing Parliament to discuss an issue of such fundamental importance.

John Gummer: Is my hon. Friend aware that the FSA is demanding £120 million extra to pay for more regulation of the same kind, and that much of the burden of that will fall on the very companies that have suffered because of the failure of the FSA's regulation?

George Osborne: My right hon. Friend is right. It is especially unfair that the burden of the levy is falling on the building societies rather than on the investment banks. Many of the building societies—especially the larger ones, such as Nationwide—did the right thing and are paying a heavy price for it, as I saw when I went to Swindon. I will be going again to Swindon several times over the next year to discuss these issues with Nationwide.

Geoffrey Robinson: Would the hon. Gentleman's £50 billion loan scheme, count as Government expenditure? If so it would add massively to borrowing, and he has to accept that. Who would administer this scheme by which he is so mesmerised? At one point, the Tories suggested a new Government quango, but without much conviction. Most importantly, would he seek any security for loans made under this phantom scheme that he has invented and thrown up for general discussion without a single convincing element to lend it credibility? Would he require security, or would it be a question of everybody having what they want?

George Osborne: I get the point. The scheme would be of the same nature as the guarantees we offer for interbank lending, and would be scored in the same way. Of course there would be a contingent liability, but it would not add to public borrowing. The scheme would be administered by the banks, because they have the commercial judgment— [ Interruption. ] I do not suggest that the Government should engage directly in making loans to small and medium businesses, or even large ones. The banks can do that with the support of the Government and the guarantees provided by the Government— [ Interruption. ] I do not know why Labour Members are so surprised. This is the scheme that the Government are supposed to be setting up, but it has not actually happened yet. Of course, as with a good commercial loan, there would be collateral, but the point is that businesses cannot get commercial loans and there is no credit flowing in the economy, because of the credit crunch.
	The Government cannot engage in any of the debates about making good the mistakes of the past or learning the lessons about what went wrong because they are led by a man who thinks that no mistakes at all were made. He thinks that there were no mistakes in the system of regulation, in the wanton destruction of savings and pensions, or in allowing an economy to be built on debt.

Andrew Love: Will the hon. Gentleman give way?

George Osborne: I have given way to the hon. Gentleman already and I now want to make some progress as many hon. Members wish to speak.
	The Prime Minister said clearly when he was on that plane to Washington that he had nothing to apologise for. We can picture the scene—standing in the aisle, his hand gripping the headrest ever tighter, and trying hard to control his rage as he says with menace, "I have nothing to apologise for." It is the "je ne regrette rien" moment of this recession. The moment when the hubris is exposed, and when we realise just how out of touch the Prime Minister has become.
	Of course, those around the Prime Minister realise it too. The Chancellor is urging him to apologise. The Secretary of State for Children, Schools and Families, one of the Prime Minister's closest allies, is urging him to apologise, we understand. But the Prime Minister will not listen, because he genuinely believes, deep in his bones, that he has nothing to apologise for. Because that betrays such a deep misunderstanding of what has happened to the British economy in the long years that he has been in charge of it, it shows that he cannot possibly be the man to learn the mistakes of the past and lead our country into a better and more sustainable future.
	If Labour Members will not listen to that argument made by a Conservative, they should listen to the Secretary of State for Communities and Local Government. She said:
	"You can't just pretend you weren't there...if you don't have any acknowledgment of anything then...where do you get permission to give them a vision of where the future needs to be?"
	That is what she is telling the Prime Minister who chairs the Cabinet to which she belongs.
	Britain is in the deepest recession that it has known for a generation. The IMF predicts that alone in the world, our economy will shrink next year as well. We have the highest budget deficit in our peacetime history, and we are storing up such debts that it will be our children and grandchildren who end up paying them off. The economic model that the Government pursued for 10 years was built on debt and it has failed. Now the blizzard of schemes announced by the Government to tackle the recession is failing too. Ministers have confused a headline in the newspaper with real help now for their constituents, and we have a Prime Minister who will apologise for nothing and who is deeply disconnected from the reality of the economic mess he has created. The country desperately needs change. And it is the weakness of a Government, who dare not call an election, that they stand in the way of that change. The sooner they go the better, for the sooner then we can begin a recovery.

Yvette Cooper: I beg to move an amendment, to leave out from "House" to the end of the Question and add:
	"recognises the impact the international credit crunch is having across the world and for households and businesses in every region of the UK; supports the Government's decisive action to stop the banking system collapsing, secure the sector's role in supporting the economy, households and businesses and remove blocks to sustainable lending; notes the agreements made with Lloyds, RBS and Northern Rock to increase lending to individuals and firms; welcomes the action in line with other countries across the world to boost the economy this year and next with targeted support to people and businesses including the value added tax cut, helping homeowners avoid repossession, a range of measures to provide finance and defer tax liabilities for business, pensioner payments, increased child benefit and a tax cut of £145 for 22 million basic rate taxpayers; further notes the extra resources to support those facing redundancy and seeking work; further supports the bringing forward of capital projects to improve public services and infrastructure, and provide jobs now; further notes that the Government has set out measures to deliver sustainable public finances; further welcomes the Government's leadership of the G20 and its focus on co-ordination between countries, equipping the International Monetary Fund and the World Bank with the resources and tools needed, and reform of global financial regulation; and further supports the Government taking action now to come through stronger and faster so that the UK can take advantage of the world recovery."
	The hon. Member for Tatton (Mr. Osborne) has tried to entertain the House with drama. Unfortunately, I noticed that the right hon. Member for Wokingham (Mr. Redwood) and the hon. Member for Uxbridge (Mr. Randall) seemed to sleep through about half of his speech. The rest of us listened to a huge amount of bombast and feigned indignation that would have been at home on the floor of the Oxford Union, but contained no substance about what the hon. Gentleman would do to help the unemployed—those who have lost their jobs and who need our help to get back into work. We have heard nothing about how the Opposition would help businesses, how they would help families and how they would support the economy through difficult times.

Gerald Howarth: Can the Chief Secretary tell us why the Chancellor of the Exchequer is not answering this most important debate, which is of huge concern to the people of this country? Is it just that he cannot be bothered?

Yvette Cooper: As the hon. Gentleman will know, the Chancellor of the Exchequer was in the House on Monday and will be in the House again next week. He will be answering the Treasury Select Committee tomorrow and will be leading a debate on the economy before the end of the month. The hon. Gentleman will agree, I think, that the Chancellor of the Exchequer has repeatedly debated the economy and discussed it in this House. I am sorry that the hon. Gentleman is disappointed to see me at the Dispatch Box, but I have to say that I miss debating with the hon. Member for Runnymede and Weybridge (Mr. Hammond) and I look forward to listening to his speech later on.
	First, I want to address the immediate action that we are taking here and internationally to help families and businesses to deal with the global credit crunch. I then want to turn to the issue of how we will address some of the long-term causes and the long-term opportunities for our future.
	I sometimes wonder, when Conservative Members talk about the economy and the actions that we need to take, whether they understand the scale of the financial crisis that the world is going through. Lord Turner said today that
	"the world's financial system has gone through its greatest crisis for a least a century".
	Extraordinary events and extraordinary risks to our future require extraordinary action, not just here but across the world, to get us through. When Conservative Members change their minds about whether they support the action that we took in October, they misunderstand quite what the risks were not just to our economy but to the world economy last October, the sheer scale of devastation that would have been caused if those international banks had gone under and how important the recapitalisation scheme was.

David Tredinnick: We do not need extraordinary action, but simple action. What do I say to Labelsco, a company whose representatives I spoke to in my constituency this morning and who have shed 25 per cent. of their work force and are desperately looking for the enterprise finance guarantee scheme and the working capital scheme to support their businesses, only to be told by their two banks that the scheme is not available?

Yvette Cooper: The enterprise finance guarantee scheme is available and people should ask their banks for it. If the hon. Gentleman has a case in which a particular business has been turned down for the scheme, I am happy to look into that case for him. I assure him that the enterprise finance guarantee scheme is in place.
	I want to turn to the measures that are in place to support the economy.

Anne Main: May I take the right hon. Lady back to the statement she made that implied that this was somehow like a debate on the floor of some posh university? I had a business summit where 30-odd businesses said that they were not getting the help that they need from the Government. Citizens Advice has seen a fourfold increase in the number of people coming in with debts and who have no support with their loans and their mortgages. This is not some sort of game. My constituents are suffering and unless she wants me to take back to them the fact that there is complacency in the Government, can we have some real solutions, please?

Yvette Cooper: Let me say to the hon. Lady that we believe that this is very serious. It is exactly right to provide additional support to businesses and families across the country, and to use Government support to help people. The hon. Lady's party opposes that. Her party repeatedly denies the economy the support it needs and it is not prepared to put in the additional investment that the economy needs. She needs to recognise the importance of being prepared to put your money where your mouth is in order to support the economy at a time when it needs that support.
	The biggest bank in the world would have defaulted on its loans if the US Government had not stepped in. Governments across the world were right to step in and prevent the banking system from collapsing and they were right to step in to ensure that banks are strong enough to withstand the global recession and to start cleaning up banks so that they can get lending to businesses and first-time buyers going again.
	The shadow Chancellor has also dismissed the significance of global action and has said that it has limited effect, yet at a time when world trade has dropped so substantially, when the world economy is contracting for the first time since the second world war and when poorer countries are at even greater risk, only co-ordinated global action can get us through. Japan, Germany and Italy are all in deeper recession than the UK.

John Redwood: rose—

Yvette Cooper: I am quite happy to give way to the right hon. Gentleman now that he is awake.

John Redwood: The right hon. Lady might want to correct the record. I have followed every word in this debate and it is quite wrong of her to mislead the House in such a way.
	Will the right hon. Lady now answer the real question? How much money have the Government spent, committed and guaranteed on the bank support programme so far and what have we got for it?

Yvette Cooper: I am glad to know that the right hon. Gentleman concentrates so hard with his eyes closed and his shoulders shrugging. I was asked about the asset protection scheme, the which we have set out details of and put into place. I was also asked about the recapitalisation that took place earlier in the year. In exchange for those, we have lending agreements that have been signed up to by the major banks. For RBS, the agreement is worth £25 billion of additional lending, and for Lloyds it is worth £4 billion of additional lending. The right hon. Gentleman will recognise that we cannot get banks lending if they do not stand up in the first place. That is why it was so important to prevent the banks from going under earlier this year.

Michael Fallon: Can we come back to the enterprise finance guarantee scheme? Is the Chief Secretary aware that the Kent and Medway branch of the Federation of Small Businesses has written to me, saying that
	"awareness of the scheme is patchy—among both business and, somewhat disappointingly, high street banks themselves."
	Why are not these schemes better known and working properly in our constituencies?

Yvette Cooper: I am glad that the hon. Gentleman, unlike some of his hon. Friends, concedes that the scheme is up and running and is providing support for businesses. I agree that I want to see us do more to ensure that businesses are aware of it. I point him towards the Government's new "Real help now" website, which provides substantial additional information that he can distribute to his constituents and to businesses across the community. We all have an obligation to ensure that our constituents and businesses in our areas are aware of the additional help that is available. Unfortunately, that additional help is not supported by Opposition Members because they are not prepared to put in the investment or the finance to support it.

Peter Bone: It is very good news to hear from the Chief Secretary that the scheme is in place. Can she tell us how much has been lent?

Yvette Cooper: Lending is already in place for a series of different schemes. For example, 90,000 businesses have already had tax worth £1.5 billion deferred as a result of measures that have been in place since the pre-Budget report. Again, that measure was opposed by the Opposition, because they are not prepared to put the money in to give the economy the help that we need.

Robert Smith: One of the success stories of the UK economy has been the north sea oil and gas industry, which has more than 500,000 jobs, has provided a third of corporation tax revenues this year and makes a contribution to the security of our energy supply. The big challenge is that the new companies that have been driving the exploration were reliant on the lending from the banks that has dried up and has still not come back. One proposal from the industry, which we should look at constructively, is to bring forward the tax relief that it receives on exploration so that it is payable up front to encourage more cash flow and to get the industry investing again. That would keep the industry going through this trough so that it is there when the economy picks up.

Yvette Cooper: The hon. Gentleman is right to point out the concerns that have been raised by a series of different major investors about the fact that companies need to invest for their future and for all of our futures and about the pressure that has been put on them by the global credit crunch. I am certainly happy to take the hon. Gentleman's comments as a Budget representation and to pass them on to other Ministers in the Treasury.
	In the 1930s, Governments and central banks across the world fundamentally failed to rise to the economic policy challenges of their day. The consequences for economic prosperity and political stability were devastating. That is why we and other Governments are so determined that we will act together this time, with co-ordinated action to safeguard the banking system, boost our economy, tackle tax havens and tackle international regulation, too.

Oliver Heald: The right hon. Lady has not mentioned consumer confidence. With repossessions going up, mass unemployment and holes in people's pension funds as a result of the falling stock market, does she accept that there is a sense of insecurity in the country from the cradle to the grave? What are she and her Government doing in delaying the schemes on homes and jobs that would make a difference?

Yvette Cooper: The hon. Gentleman is right to say it is important to support consumer confidence. We have to do more to put more money in people's pockets at a difficult time and to help to support the economy in different ways. That is the approach that we are taking, through both monetary and fiscal policy. Sadly, it is not supported by his party.
	The Conservative party is the only party in Europe that refuses to back extra Government fiscal action to help our economy. Yesterday, the Governor of the Bank of England said that we need
	"a growth of nominal demand sufficient to reverse the extraordinarily steep and simultaneous downturn in output around the world."
	That means using monetary policy to boost the economy. As a result of the legal framework that we set out for the Bank of England in 1997, it has a duty to prevent deflation as well as inflation. That is why it has cut interest rates significantly, and that has put hundreds of pounds a month back into the pockets of mortgage holders. With the support of the Government, the bank is now using £75 billion to increase the money supply by buying further assets in the market. That is already having an impact on the markets.

John Baron: The Chief Secretary to the Treasury has been somewhat dismissive of the concerns of those hon. Members who have given examples of where credit has not got through. What would she say to third parties such as the Federation of Small Businesses or the chamber of commerce in Essex? Time and again, their surveys show clearly that credit is not reaching profitable, viable businesses and that jobs are suffering as a result.

Yvette Cooper: The hon. Gentleman is simply wrong. In fact, I am very concerned about the lack of credit for important and viable businesses, and that is why we are taking a series of steps and measures to try to support them and help them to get the credit they need. However, I remind him that the credit crunch is global, and that there has been a reduction of £100 billion in the lending in this country by foreign financial institutions. Near my constituency, for example, an important development for the area has been jeopardised because the Anglo Irish bank has pulled out.
	Right across the country, there has been a reduction in lending as a result of the credit squeeze and of the fact that banks are no longer lending to each other. What do we need to do? We need to get banks lending again, and we are taking a series of measures to do that.
	The first such measure, obviously, was to make sure that the banks were still standing. Without banks, there can be no bank lending. Our recapitalisation of the banks in October was critically important to keeping them lending. The Opposition supported that at the time, but they have prevaricated since then. They have made it clear that perhaps they no longer support what I believe was a hugely important measure to support our economy's financial stability.
	The second measure was to make sure that the banks were strong enough to withstand what is now a global recession. We had to be certain that they were strong enough to deal with their capital and liquidity problems, and with their toxic and problem assets. For that reason, we have put in place the asset protection scheme, which has very clear and binding lending agreements. As a result, banks are now pledged to deliver more lending to businesses and mortgage holders in the coming financial year than they did in the preceding year.
	We need to monitor those lending agreements to make sure that the money gets out to businesses, in the constituency of the hon. Member for Billericay (Mr. Baron) and across the country. They need that money, as does our economy.

Brian Binley: Will the right hon. Lady give way?

Yvette Cooper: We have also put in place further measures, such as the enterprise financial guarantee scheme, to support small businesses that are especially in need of help. We are working on further proposals, including through the working capital scheme, to put additional support into the economy.

Brian Binley: Will the Minister give way on that point?

Madam Deputy Speaker: Order. The Minister is responding to an earlier intervention.

Brian Binley: But she is wrong!

Madam Deputy Speaker: Order.

Yvette Cooper: Thank you, Madam Deputy Speaker. I have to tell the House that there will be no single quick fix for the problems that we face. Japan's manufacturing output has fallen by 40 per cent. in three months, and countries across the world are being hit in a very substantial way by the global credit crunch. Only by taking major action on a series of different fronts will we be able to support our economy through these difficult times.
	That does not simply mean taking action on the banking system and credit, hugely important though that is. It also means that we have to take action through monetary policy and the Bank of England's ability to bring down interest rates—

Brian Binley: Will the Minister give way now?

Christopher Huhne: Will the Minister give way?

Yvette Cooper: I will give way to the hon. Member for Eastleigh (Chris Huhne).

Christopher Huhne: I am very grateful to the Chief Secretary for giving way. A number of hon. Members are clearly worried, not about the announcements of guarantee schemes but about their delivery and the extent to which credit is getting through. I know from my own constituency surgery how large the problem is, so will the right hon. Lady undertake to give us the figures on the amounts that have been lent under these schemes? Will she do so on a regular, monthly basis as part of the monetary statistics that are published by the Bank of England? In that way we can assess how much credit is getting through to businesses.

Yvette Cooper: The hon. Gentleman asks an important question, and I shall give him some examples. It is clear that we need to be able to make sure that the lending is getting through, but we must also recognise that the scale of the withdrawal of credit by foreign institutions in this country means we must do a huge amount of work on a range of different fronts. That is why it is important to look beyond bank lending and lending to business to find other ways of supporting demand in the economy through this difficult time. I know he would agree with that.
	The hon. Member for Eastleigh asked for details of some of the specific schemes. For example, additional funding from the European Investment Bank of over £300 million was for small and medium-sized enterprises in November's pre-Budget report. That has now been approved, while the enterprise finance guarantee scheme is in the middle of processing 400 loans, worth over £40 million, to businesses that otherwise would not be able to access funding. The commitments made as a result of the asset protection scheme amount to £25 billion from Royal Bank of Scotland and £14 billion from Lloyds. That is in addition to the further lending that Northern Rock has committed to.
	One of the most important schemes that we have put in place is the one that allows businesses to defer taxation. So far, 90,000 businesses have taken the opportunity to defer £1.5 billion and have been able to get additional support as a result.

Brian Binley: Will the Chief Secretary give way?

Yvette Cooper: I will give way to the hon. Gentleman. He has been so persistent, and I shall worry about his health if he has to jump up and down with indignation too many more times.

Brian Binley: The Minister is always kind and gentle with me, and I am most appreciative. She has talked about the impact on small businesses of the Government's loan schemes, but I remind her that on 13 March the Minister for Employment Relations and Postal Affairs said that 26 applications had been approved and that loans were "being made". I take that to mean that not one loan under that scheme has so far got through to small businesses. Will the Minister explain that?

Yvette Cooper: I have just updated the hon. Gentleman and the House on a series of different schemes, and in particular on the additional lending that has been put in place already. However, I repeat that we face difficult and unprecedented circumstances. That is why it is right to increase support for additional lending, and to look at other ways to support the economy and the level of demand within it.
	I say again to the House that we can put such schemes in place only if we are prepared to put the funding in. Time and again, Opposition Members have refused to support the investment and the Government action needed to deliver any support to households or businesses across the country.

John Butterfill: Will the right hon. Lady give way?

Yvette Cooper: I must make a little progress and set out the additional support that we have put in place to help people through these difficult times. For instance, 12 million pensioners have received £60 each since Christmas, but that was opposed by the Conservatives. Moreover, 7.5 million families have received an increase in child benefit, another move opposed by the Conservatives. We have increased the investment in the Warm Front scheme so that more homes can be insulated, but that has been opposed by the Conservatives too.  [ Interruption. ] Opposition Members can shake their heads, but such measures are all part of the fiscal stimulus that their party has opposed. Millions of households are benefiting by an average £20 a month as a result of the cut in VAT. That reduction was supported by the Institute for Fiscal Studies, which has said that it is in effect equivalent to a cut of around 1 per cent. in interest rates.

John Butterfill: Will the Chief Secretary to the Treasury give way?

John Randall: Will the right hon. Lady give way?

Yvette Cooper: I am tempted to give way to the hon. Member for Uxbridge, because he has finally woken up. However, I promise that I will give way to the hon. Member for Bournemouth, West (Sir John Butterfill) in a second.

John Randall: Perhaps the right hon. Lady does not appreciate what it is like to run a business. I have a retail business with 30 employees, and I see how complacent and useless the Government are. I sometimes lay awake and find it difficult to sleep at night as I have 30 people's jobs to worry about. I see that only 15 Labour Back Benchers are here to discuss this important issue. I cannot understand why the country does not realise that her party is not interested. However, my question is on VAT. Will she now acknowledge that the reduction in VAT was a gimmick that helped no one, and was a burden on retailers?

Yvette Cooper: Let us just deal with the specifics of the VAT cut. It means that at the end of each month, households across the country will be better off by an average of £20. The VAT cut is supported by the Institute for Fiscal Studies, which said that the effect is equivalent to an interest rate cut of around 1 per cent. Indeed, a VAT cut benefits everyone, unlike a cut in interest rates, which obviously has a different impact on savers and borrowers. It therefore has a fairer impact than simply using monetary policy to support the economy. The Office for National Statistics has said that price cuts have been passed on to consumers in 70 per cent. of cases, and Goldman Sachs has argued that the VAT cut is already having a beneficial impact on retail sales. It is right to support the economy, and to put that extra investment in. As a result of the measure, we are already getting billions of pounds of extra money into our economy. We believe that it is right to help the economy through a difficult time.

John Butterfill: May I raise a different subject with the right hon. Lady, namely the impact that the changes in the discount rate are having on pension schemes? The deficit arising from reductions on the stock exchange is dwarfed by the deficit arising from changes in the discount rate. People are now technically much more in deficit than they were. That is creating a problem for the pensions regulator. It is also creating another potential problem, which I have discussed with the Pension Protection Fund. Unless something is done about that technical problem, firms will go under because they cannot sustain their pension scheme. Otherwise viable companies will be asked by the PPF for contributions that are wholly unaffordable. We need a longer perspective; we need a moratorium until we get out of this situation, if we are to keep some of the companies concerned alive.

Yvette Cooper: I know that the hon. Gentleman has great expertise in pensions, and that Ministers at the Department for Work and Pensions have been looking into the issue. I am happy to discuss it further with him, if he has not been able to discuss it with them directly. He is right: the contraction in the world economy and in the financial markets is having an impact not simply on stock markets, but on pension schemes right across the economy. That is why it is so important that we all pull together and do everything we can to get not just our economy but every economy right across the world moving again.

Jeremy Browne: rose—

Yvette Cooper: I will give way to the hon. Gentleman, but then I need to make some progress.

Jeremy Browne: I am grateful to the right hon. Lady for giving way. Millions of people across the country will be relieved to hear that the Government predict that the economy will be in recession only for another three and a half months, and will start growing again at the beginning of July. Will she take this opportunity to say whether that is still the Government's position?

Yvette Cooper: As the hon. Gentleman knows, the Chancellor will set out his forecast in the pre-Budget report in the normal way. The Bank of England has forecast growth in the economy next year, and the Chancellor will update the House as part of the pre-Budget report.
	We have already set out a series of extensive measures to support the economy, including action to help pensioners, families, businesses and households right across the board, and it is true that there is more to come. We have made it clear that we will do more. We have new programmes that are about to be implemented, which will give people extra support. We will go even further, because we believe in doing so, and the Conservative party does not. It is not prepared to fund such measures. Time and again, it has said that it would not be prepared to make the investment that is needed to support the economy.
	In April, an increase in tax allowances, worth £145, is to come in. There is to be an increase in pensions of £4.55 a week, a new health in pregnancy grant, and £1.2 billion extra for jobcentres, to help to get people back to work. That £1.2 billion was opposed by the Conservatives. There are to be new recruitment subsidies for those who have lost their jobs; that was opposed by the Conservatives. There are to be new apprenticeships for school leavers; that was opposed by the Conservatives. There is to be £3 billion of extra capital investment to support thousands of jobs. There are to be repairs to primary schools, new roads and new homes; that was opposed by the Conservatives. Extra help for mortgage holders to prevent repossessions, and extra help for businesses through the new schemes, were all opposed by the Conservatives. All that help is being introduced in a mere matter of months, but it was opposed by the Conservatives. They call for more, but they want to spend less.
	Let us look for a second at the only measure that the Conservatives have proposed: a national loan guarantee scheme, which completely collapses under scrutiny. They are confused; they have not said whether they are guaranteeing new loans or existing loans. They will not price on risk, yet they claim that no losses will be made. That is simply not credible. They claim that the scheme can be introduced straight away, yet they have given no proper detail. Most important of all, they have not been prepared to put any money behind it. The shadow Chancellor claimed that the scheme
	"does not add to public expenditure."—[ Official Report, 18 December 2008; Vol. 485, c. 1228.]
	However, last week, the shadow shadow Chancellor said that if anything goes wrong with the guarantee, the taxpayer will take some of the hit. The truth is that the scheme would cost money if carried out in the way proposed by the Conservatives, but they are not prepared to put any cash behind it. Time and again, they refuse to do what is right for Britain because they are ideologically opposed to Government action and Government investment.

John Gummer: If the Government are doing all these wonderful things, why has the International Monetary Fund said that the recession will last longer in this country than in any comparable economy? Is it not a fact that although this is a world recession, the Government have caused our recession to be a great deal worse than that in any other country to which we would compare ourselves?

Yvette Cooper: If the right hon. Gentleman looks at the facts so far, he will see that the drop in growth has in fact been steeper in Japan, Germany and Italy than in the UK. Obviously, as we all know, the problems started earlier in the US; it has been experiencing economic difficulties for much longer. London is one of the greatest financial centres in the world, so of course that means that the financial sector will be affected by the global credit crunch. Nevertheless, all countries across the world are being affected, although they are often in very different circumstances and often have very different kinds of economies. The key question is: are we prepared to take the action that is needed to do something about the matter?

Patrick Hall: My right hon. Friend mentioned that one needs to believe in action in order to pursue it. One also needs to understand the problem. She will have noticed that every time she mentioned the global nature of the credit crunch, her words were met by derisive calls from the Opposition, who do not seem to understand or accept the global nature of the problem. May I therefore ask her how she thinks the G20 will provide an opportunity to address one of the glaring problems that we face, namely the lack of international oversight and regulation of capital flows?

Yvette Cooper: My hon. Friend is right. The fact is that no matter how tight the regulatory system is in any one country, no country could escape the impact of the global recession because of the interconnectedness across borders, and the way in which credit flows across borders. He is right: we need greater international co-operation and greater international regulation to look at those sorts of cross-border flows.

Philip Dunne: Will the right hon. Lady give way?

Yvette Cooper: I am sorry, but I will make some progress. Conservative Members do not understand that if we do not act, it will cost us more. If, in the early '90s, the Conservatives had provided something similar to the fiscal boost that we are providing, they could have saved 300,000 jobs. If they had done something similar in the early '80s, they could have prevented an entire generation from being scarred by long-term unemployment. It is worse than that: they do not want simply to do nothing—they want to make things worse. They want to cut £5 billion from public spending at the end of next month. That means cutting spending on housing by at least £800 million from next month, just when the construction industry is in real difficulties. That is the equivalent of 10,000 new homes for social rent. They want to cut the budget for training and science. They have said that they would restrict it to 1 per cent. That means cutting it by at least £900 million from next month, at a time when young people need extra support. That is the equivalent of cutting 220,000 apprenticeships. They want to cut investment in transport infrastructure just when we need to invest in the infrastructure for the future.
	That is complete economic madness. In the words of the winner of the Nobel prize for economics, Paul Krugman:
	"Renouncing a fiscal stimulus when private spending is contracting is strange. Governments have very few tools at their disposal, and Cameron does not want to use them."

Several hon. Members: rose —

Yvette Cooper: I have given way considerably.
	We entered this financial crisis with one of the lowest levels of Government debt of any major country, and even after the action we have taken, we are still forecast to have lower debt than most of our major competitors. That is why we can act now. It means we will have to take action to bring borrowing back down in future years, so yes, we will introduce a new top rate of tax and cut tax-free allowances for those on over £100,000. Yes, we will expect the public sector to deliver even greater efficiencies to support the economy in future. But here is the difference between us. Whereas we will introduce a new top rate of tax and a new law to help to cut child poverty, the Opposition want to introduce inheritance tax cuts for millionaires and cut the Sure Start scheme—our priorities, compared to theirs.
	Last year, the Chancellor asked Lord Turner as the new chair of the Financial Services Authority to look again at our regulatory framework and to put forward more reforms for the future. His report, and the Government report "The Road to the London Summit", outlines many of the problems that led to the financial crisis, and the need to take action now to deal with those problems for the future. We welcome Lord Turner's report—

John Gummer: On a point of order, Madam Deputy Speaker. Is it in order to quote from a document that has been produced today, but not provided to the House? That is what the Minister is doing.

Madam Deputy Speaker: I dealt with that point of order earlier in the debate.

Yvette Cooper: May I point out that the shadow Chancellor quoted from the document in question?

Several hon. Members: rose —

Yvette Cooper: I give way to my hon. Friend the Member for Edmonton (Mr. Love).

Andrew Love: I thank my right hon. Friend for giving way. Picking up on the theme of the shadow Chancellor's speech, are not those who should apologise to the House the Opposition Back Benchers who called for deregulation and further deregulation right up until the credit crunch hit?

Yvette Cooper: My hon. Friend makes an important point. I shall come to the challenges that led to the global credit crunch.
	I give way to the hon. Member for Na h-Eileanan an Iar to whom I have not yet given way.

Angus MacNeil: I am grateful to the right hon. Lady for giving way. Unemployment has passed the landmark of 2 million. Some people reckon that in the next year unemployment will reach 3 million, an increase of 50 per cent. Is this the right time to introduce £1 billion of cuts to Scotland, as well as to Wales and Northern Ireland? Cutting the budgets of the Scottish, Northern Ireland and Welsh Governments is the exact opposite of a fiscal stimulus.

Yvette Cooper: That is why we are not doing that. In fact, we are increasing the investment over the next two years by £2 billion in Scotland, because we think it is right to increase investment in Scotland, in Scottish jobs and in support for training and for services in every corner of the country.
	Returning to the Turner report, we will issue a White Paper which sets out further proposals. As the shadow Chancellor said, we need banks to be boring again, we need banks to get back to basics, and we need bankers to stop behaving like masters of the universe.
	The shadow Chancellor would have us believe that his party would have been more likely to prevent these problems in the first place. I want to test that idea and show what astonishing nonsense it is. The idea that the Conservatives would have proposed stronger international regulation of the financial system in Europe or globally is a joke. While we have been working with European and global partners to agree reforms, they are busy pulling out of Europe.
	The idea that the Conservatives would have proposed stronger financial regulation here at home is even more of a joke. Here is what the shadow Chancellor said just before the credit crunch started:
	"Regulation . . . inhibits enterprise. For example, speak to any business in financial services—from the largest investment bank to the smallest independent financial adviser—and the threat of future regulation from Whitehall and Brussels is now their number one concern."
	As for the shadow Chancellor's comments about household debt, house prices and the increased lending in the mortgage market, what were the Conservatives calling for before the credit crunch started? They were calling for limits on house building, which would have pushed house prices up further, a cut in stamp duty, which would have pushed house prices up further still, and an end to mortgage regulation altogether. The fact is that the Opposition fought against all our regulation. Their policies would have made the problem worse.

George Osborne: I am grateful to the Chief Secretary, who was quoting what people were saying just before the credit crunch. Let me quote what the present Secretary of State for Children, Schools and Families said in October 2006. He said:
	"Some have suggested that given their central role in the economy, it would be appropriate to treat banks just like utilities—to subject them to . . . onerous rules on how they interact with their customers. The alternative approach—and the one I favour—is to rely on market forces and competition policy to promote efficiency through open and competitive markets".
	By the way, in the same year the Prime Minister heralded
	"a new golden age for the City".
	Perhaps the right hon. Lady should have a word with her husband and with her Prime Minister.

Yvette Cooper: I will have a word.
	The hon. Gentleman is talking about people who were putting forward regulations that he fought against. At the time that he is talking about, the present Secretary of State for Children, Schools and Families and the Prime Minister were pressing forward with regulations that his party opposed repeatedly, at every stage. When the Labour party introduced stronger and tougher regulation, the Conservatives opposed it, time and again. I agree that we need to go further and introduce stronger regulation. That is why we commissioned the Turner report.

John Redwood: rose—

Yvette Cooper: I am delighted to give way to the right hon. Gentleman who championed less regulation and wanted to abolish mortgage lending regulation altogether.

John Redwood: If the right hon. Lady tried reading the report, she would see that it said we needed tougher regulation of capital and cash, which the Government singularly failed to provide, and less regulation of process, which did not stop a single dodgy mortgage.

Yvette Cooper: In his report, the right hon. Gentleman argued for a complete end to mortgage regulation.

Geoffrey Robinson: It might help my right hon. Friend if I read from the report largely authored by the right hon. Member for Wokingham (Mr. Redwood). He wrote—this is with the full authority of the final report of the Conservative party economic competitiveness policy group:
	"We see no need to continue to regulate the provision of mortgage finance"—
	 [Laughter.] The best bit is yet to come. The report goes on to say that
	"it is the lending institutions rather than the client taking the risk."

Yvette Cooper: Hon. Members seem to be laughing at my hon. Friend. Do they realise that he is quoting from the Conservatives' report, which called for— [Interruption.]

Madam Deputy Speaker: Order.

Yvette Cooper: The Conservatives report called for an end to mortgage regulation just a month before the credit crunch began. That is shocking, at a time when we need to increase regulation. The Conservatives have continued to oppose the tougher regulation that we need, and they have opposed the action and the investment that we need to get our economy through difficult times.
	We have a fundamental difference in philosophy. We believe in internationalism and in working with our international partners in Europe, in the US and across the world. The Conservatives would pull out of Europe and would be isolated in their economic strategy. We believe that when markets fail, it is right for the Government to step in, support people and help them through. They believe in rolling back the state and cutting help for people. Only a few months ago, they were saying they wanted a Government who got off people's backs. What they meant was a Government who turn their back.

Angus MacNeil: Will the Chief Secretary give way?

Yvette Cooper: We believe that when things get tough, we need to pull together to get through, not leave people to sink or swim alone. We believe that we need to help those who are hardest hit with extra support whereas they want—

Hon. Members: Give way!

Madam Deputy Speaker: Order. It is entirely dependent on the Minister whether she gives way. She has made it clear that at this point she is not giving way.

Yvette Cooper: Thank you, Madam Deputy Speaker.
	Conservative policy would be devastating for the British economy. Instead of helping those who are hardest hit, the Conservatives simply want to help millionaires. Just as they did in the '80s and '90s, they want to turn their backs on people who need help. We will not do that. We will keep supporting British business and British families with the help that they need to get through. That is why we reject their motion today.

Madam Deputy Speaker: I remind right hon. and hon. Members that Mr. Speaker has imposed a 12-minute limit on the contributions of Back-Bench Members.

Vincent Cable: I agree with the argument of the Conservative shadow Chancellor and his colleagues that the Chancellor of the Exchequer should be here. We have had two very important announcements on economic matters, one on unemployment and one on a fundamental reform of financial regulation, each of which independently would have justified the Chancellor's presence, and he should really be here. We know that he has a hard time fending off calls from No. 10 Downing street, but that is not an excuse for not reporting to Parliament. Therefore, I totally support that point.
	The central point to be made on the motion is that the enormous gap between the rhetoric and the action is in many respects true. In some ways, the motion understates the case. To take the problem of repossessions, the Government have four schemes, not just one—none of which, as far as I can establish, is properly operational—plus an empty property clearing house, which does not seem to be working with any volume, and a social housing building programme, which is virtually at a standstill. So even if we take one narrow area, there is very little progress to report.

Yvette Cooper: I am sorry to intervene so soon in the hon. Gentleman's speech, but in fact interest payments on mortgage interest have been in place since January, and the mortgage rescue scheme is also in place, with housing associations and local councils able to use it now.

Vincent Cable: The schemes have been institutionally established, but the question is whether people are benefiting from them. Even the most optimistic in the housing sector are saying that at the very most at the end of this financial year, 10,000 to 12,000 of the 75,000 repossessed households will have had access to these schemes. I hope that it is more, but that is the position.
	However, there are occasions when it is desirable that there is a gap between the rhetoric and the delivery. I am rather surprised that the Conservatives have thrown their weight so strongly behind the asset protection scheme, which is really a rather questionable commitment potentially of hundreds of billions of taxpayers' money to ill-defined potential losses from banks, some of which, as we have discovered during the past few days, are extremely reluctant to pay the British Government the taxes that are accrued here. I would be a little careful about rushing into the implementation of bad ideas, which the motion seems to imply.
	As the Chancellor is not here, there is an opportunity to look at some of the ideas that the Conservatives are putting forward, and I will do so from the standpoint of curiosity rather than criticism. I will try to mix that with comments on Government policy. The Conservatives got off to a very good start this weekend when the Leader of the Opposition announced his proposal for Maoist self-criticism circles as a way of approaching past failures of ideology and judgment. We can probably all benefit from the therapy of confessing past mistakes. [Hon. Members: "Go on."] I am not sure that the message has yet entirely percolated through to those on the Opposition Front Bench, which I will illustrate with reference to what I think is their central argument: that there is a general problem of debt.
	There is a key phrase in the motion, which the Conservatives repeat often, so they clearly believe in it:
	"including a build-up of government, corporate and personal debt which has left the UK more exposed than other countries".
	Of course, Government, corporate and personal debt are fundamentally different; they are different in origin and in consequences. I can understand why spin doctors might have said to the Conservatives at some point, "This is all very complicated. Let's simplify the message. Debt is a bad thing", but such debts are different, and I hope that they appreciate that, because there are some important policy implications. It is useful to take the three bits and analyse them.
	First, the Conservatives are absolutely right that there has been a dangerous and, in the UK's case, almost unique expansion of household debt to unprecedented levels—the highest in the western world, in relation to disposable income. However, I thought that I heard the Leader of the Opposition apologise on Sunday for not having spotted that until the last year. That was big-hearted of him, and he deserves credit for that. He would have been even more big-hearted if he had acknowledged that six or seven years ago Liberal Democrats were warning of precisely that problem. None the less, it was a big step forward. That is household debt, and we are now in agreement that that is a big problem lying at the heart of a lot of our difficulties. It is that model of a rapid growth in consumption fuelled by consumer debt, which the Conservative shadow Chancellor described, that is not sustainable.
	Secondly, is it true that there is a problem of corporate debt in Britain? Clearly in one or two institutions there is. There was massive leverage in the investment banks and there was a business model in the private equity companies that was based on private debt, and it is right to draw attention to that. However, the shadow Chancellor may have forgotten that two years ago he appeared at the British Venture Capital Association and referred to private equity and its leverage in these terms:
	"On these occasions, it is usual to praise your hosts and audience. Tonight that is easy. Private equity is a beacon of British excellence. The importance of your contribution to our economy is, I believe, rightly reflected in the tax treatment that you receive."
	That was praise of a highly leveraged business model, but are the Conservatives saying that the hundreds of thousands of companies that belong to the Federation of Small Businesses and chambers of commerce and the members of the CBI are systematically over-leveraged or imprudent? Is there any evidence for that? I do not think so. Anecdotes suggest—I am sure that many Conservative Back Benchers will reflect this—that after British companies had their last bad experience of very high interest rates, most of them cut back substantially on their borrowing wherever possible. I just do not see the point about lumping corporate debt in with household debt; it is a fundamentally different problem.
	If that is an issue, why are the Conservatives now promoting a loan guarantee scheme, the whole purpose of which is to guarantee additional debt for companies? I am not saying that it is a bad idea. It is a good idea, which deserves support, and I have supported it. It is not quite as simple and straightforward as they have argued, because it is complicated to asses risk, but it is fundamentally a good idea. But if debt is a problem for companies, why guarantee them to take on more? Would it not be more sensible to support debt equity conversions, or other forms of company financing?

Angus MacNeil: The hon. Gentleman makes a good point. He refers to companies that were in his view perhaps under-leveraged, but they were prime pickings for the private equity houses to buy, to increase the leverage and to take a one-time benefit from that increased leverage. Does he have any suggestion to prevent that sort of behaviour in future?

Vincent Cable: I take a cue from the Conservative shadow Chancellor's comment about tax treatment. The logical course would be to withdraw interest relief. I do not know whether the Conservatives would go to such radical lengths, but that would be the solution, as well as the capital gains treatment, which is still favourable.
	I want now to move on to the Conservatives' core criticism, which is at the heart of their economic strategy: the worry about public debt.

Geoffrey Robinson: Unusually, I am not following the hon. Gentleman's point. Is he saying that there will not be any need for, or we should not make available, subsidised or guaranteed loans, which are one and the same thing, in a recession, which is precisely the period when companies cash flow and profits drop because volumes drop? It is that period that the Opposition's ill-conceived or not yet explained loans scheme is designed to cover.

Vincent Cable: I do not think that the hon. Gentleman was listening; I said that I thought it a sensible idea. It is rapidly becoming redundant, of course, because if banks are nationalised, as some of the major ones now are, why would we want to guarantee their loans? That would be the state guaranteeing the state. None the less, the concept is right, and I have supported it and do support it; I hope that it comes into practice as quickly as possible.
	Let me turn to the issue of public debt. Of course it is right—and the Conservatives are right to stress this—that, looking forward, there is a serious public financing problem. There is a major structural deficit arising from the collapse of income from the City and the housing market, and any Government will face very serious difficulties in reining in public expenditure in those circumstances. However, acknowledging that point is different from arguing that there is a legacy of excessive public debt.
	The Government can make their own case, but it is simply a matter of fact that at the beginning of this crisis the level of public debt to GDP was less than it was at the end of the golden legacy of the right hon. and learned Member for Rushcliffe (Mr. Clarke). The shadow Chancellor said that such debt was potentially—he was talking about 60 or 70 per cent. of GDP—higher than ever in British history. I have a chart that covers the past 200 years, and it shows that only in the past 30 years have we gone anywhere near 50 per cent. of GDP.
	National debt has been way in excess of current levels for much of our history. I was brought up during the era of Harold Macmillan; those were my formative years.  [Interruption.] Actually, it was quite a good era for Britain; living standards rose. There is a lot to be said for that period of government. Supermac pointed out at the time that we had never had it so good. When he said that, public debt as a share of GDP was more than 100 per cent., twice the current levels. [Hon. Members: "That was because of the war!"] Of course it was an inheritance from the war, but it was not a crisis in itself.

David Davis: May I ask the hon. Gentleman a question about that very point? As he and I have discussed before, one of the problems is Government creditworthiness. At the point that he was describing, sterling was a reserve currency, which it is not now. Therefore issues of creditworthiness are higher now than they were then.

Vincent Cable: The right hon. Gentleman is right, and that is the correct answer to my point. We now have international capital markets so we have to be much more sensitive to the ratios. That point is totally correct, and I accept it. However, it is simply not true to say, as the right hon. Gentleman's colleague has been saying, that these are the highest levels of debt in British history. That is complete nonsense.
	We have to be conscious of the issue of international markets, and I entirely accept that point. However, if there is an issue in international markets, perhaps the Conservatives will tell us the danger level for public debt—is it 60 or 70 per cent.? What is the trigger point at which it becomes dangerous?

George Osborne: With the greatest respect to the hon. Gentleman, I think that he is confusing his argument about overall debt levels—which, of course, are climbing rapidly—and my argument about the level of the budget deficit. That is indeed at a peacetime high and, as I said in my speech, was forecast in the pre-Budget report to be 8 per cent. Many now suspect that it is at 10 per cent. or higher; we will find out in the Budget. That is the serious problem that the country faces. We went into the downturn after a long period of economic growth carrying a 3 per cent. budget deficit and climbing public debt. That was the problem.

Christopher Huhne: We are talking about debt, not deficit.

George Osborne: Deficits contribute to debt.

Vincent Cable: We are getting to the bottom of the confusion, which I do not think is mine, to be fair. There is a big deficit, and it is a structural one, and we need to be careful about it for exactly the reason given a few moments ago. However, to assert, as the shadow Chancellor often does and as this motion does, that there is some massive legacy problem from past debt is complete nonsense. The hon. Gentleman should argue his point much more accurately in future if he is to be taken seriously on this issue.

John Redwood: Does the hon. Gentleman agree that if we had to account for the state as companies now have to account, we would have to include pension liabilities and consolidated major shareholdings? That would produce a balance sheet of £4.5 trillion.

Vincent Cable: That totally ignores the other side of the balance sheet. The banks will have to be, and should be, reprivatised in—I do not know—about eight or 10 years' time. As the right hon. Gentleman knows perfectly well, when they are, all those assets will be realised. So the debt liability is completely different from the debt accrued as a result of previous deficits. The right hon. Gentleman, who is probably one of the most financially sophisticated people in the House, should surely realise that distinction.
	The obsession with the legacy of debt seems to be inhibiting Conservative Front Benchers in taking what seems to me to be simply a realistic view about the need for a fiscal stimulus. The view that they take—that one should not have a fiscal stimulus over and above the automatic stabilisers—is so extreme. I do not think that any other country in the developed world now takes that view. I managed to unearth only two from the International Monetary Fund: the first is Argentina, which is in the middle of a financial crisis, and the second is Switzerland, which is not allowed to have a fiscal stimulus for constitutional reasons. The Conservatives are arguing for a policy of complete abstinence when it comes to additional fiscal stimulus. That seems utterly wrong during a crisis of this kind.
	Most of the burden of fighting the recession is being carried by monetary policy. That is absolutely right; we are seeing the implementation of the ideas that Mrs. Thatcher, as she then was, brought in with Professor Walters and the others—of concentrating on interest rate cuts, expanding money supply and letting the exchange rate float. Fundamentally, that is how the British economy is being driven and that is right. However, it seems entirely sensible to put on top of that a modest fiscal stimulus, and I do not understand why the Conservatives have locked themselves into a completely reactionary position.
	The fiscal stimulus is small—less than 1 per cent. of GDP—and the Conservative party is unique among parties in the developed countries of the world. Moreover, its position is blinding the party to the real criticism. The proper criticism was tellingly made by the hon. Member for Uxbridge (Mr. Randall) from his standpoint as a business person: it was that the value added tax cut was entirely the wrong way to do it. The Chief Secretary to the Treasury has tried to give a defence of it, but I do not think anybody believes it. It would have been much better to have used the money in targeted public investment. Everybody can make up their own list, but we, for example, argued for social housing, home insulation programmes and public transport—things that could be mobilised quickly. At the end of that investment, we would have had an asset. That would have been a better approach. It is much better to criticise the Government from the standpoint that the VAT cut was a wasteful, foolish way of giving a stimulus than to say that we should not have any kind of fiscal stimulus at all. That is the dividing line.

George Osborne: I struggle to understand the hon. Gentleman's position. In November—that is, post the Lehman Brothers collapse and post the drop-off in demand across the world—he said, when talking about a stimulus, that it
	"should be funded. There are dangers in doing what I believe the Government propose, which is to have an unfunded tax cut, which I understand would be financed by Government borrowing...We need a stimulus that will be funded"—[ Official Report, 10 November 2008; Vol. 482, c. 499.]

Vincent Cable: That is absolutely right. I was talking about tax cuts and had argued, as I continue to argue, that there should be a tax cut for people on middle and low incomes. We continue to express that view and to argue that the approach should be properly funded. We argued for a balanced approach to taxation combined with a fiscal stimulus in the form of public investment, and we continue to take that view.

David Davis: I am just posing this as a question; I do not actually know the answer. A few weeks ago, Paul Volcker made a speech about the intrinsic problems of the American economy. One of the things he said was that in the past decade, there had been a sharp increase of about 5 per cent. in aggregate expenditure—that is, public and private and capital formation put together—to the point of about 105 per cent. of GDP. We have the same situation; for us it is about 103 per cent. One of the points about the external borrowings is that they constrain what we can safely do before running into the creditworthiness problem. How would the hon. Gentleman get around the fact that spending got us into this problem and that spending therefore may not take us out in a safe manner?

Vincent Cable: The serious argument is that if we do not have a productive fiscal stimulus of some kind and do not take people out of unemployment, which is what a fiscal stimulus tries to do, the Government will then be borrowing to keep people unemployed instead of borrowing to keep them in work. A fiscal stimulus is a much better way of using the Government's balance sheet and borrowing capacity than just allowing unemployment continue to grow—which the Government then have to continue to finance.

Patrick Hall: I understand that the IMF has declared that the entire package of fiscal and monetary stimulus in this country is worth 3.4 per cent. of GDP, not 1 per cent.—the figure to which I think the hon. Gentleman referred. Will he comment on that? Does he think that 3.4 per cent. is a significant step worth taking?

Vincent Cable: I am puzzled by that number, which the Chancellor used on Monday. I checked up afterwards on where he had got it from. I think that he added together the VAT cut, which is less than 1 per cent. of GDP, to the bringing forward of public investment; I think that that is how he got that number. The problem is that that bringing forward of public investment is not happening for the reasons given by the Leader of the Opposition in Prime Minister's questions. We know that colleges in our constituencies have spent a small fortune doing feasibility studies or preliminary works, and that they have now been told by the Department for Innovation, Universities and Skills that they are not allowed to proceed. That public investment is being stopped and it will be clawed back during the next financial year of 2010-11. One asks a basic question about where the stimulus is and what will happen to it.

Geoffrey Robinson: I hesitate to involve myself in this economic seminar with the Liberal spokesman, but again, I did not understand—unusually—his reply to the shadow Chancellor's intervention. In November, the hon. Member for Twickenham (Dr. Cable) said that he wanted tax cuts on the one hand and stimulus on the other, and that tax cuts would, in some miraculous way, fund the stimulus. I do not get that at all. I did not hear an answer to what he was asked.

Vincent Cable: I apologise to the hon. Gentleman; I may be particularly inarticulate today. I thought that I made two very simple points. People may or may not agree with the policy, but we believe that there should be a tax cut for those on low incomes that should be fully funded by tax increases elsewhere on those who we believe should pay for it. People may disagree with that policy. They may think that it is impractical and that it has bad incentive effects, but what we are arguing is clear.
	Let me move away from the economic seminar—we are getting rather bogged down in economics—and on to something a bit cruder and more straightforward, which is the role of the banking system. That is fundamental to the matter. We supported the Government five months ago when they embarked on the capitalisation of the banks. I have to say that we have become progressively disenchanted as it has become clear that the Government have taken on ownership and responsibility for the banks without having a clue as to what they will do with them, and without exercising any effective governance. The banks are still completely unclear as to whether their primary job is to lend more or to accumulate more prudential capital—they are torn between those objectives. The Government are not giving them clear instructions. They do not need to get involved with the administration of banks, where they obviously have no competence, but they should give them a basic sense of strategy. They have still not sorted out the appalling remuneration arrangements, and the Conservative shadow Chancellor was right about that. There does not appear to be any structure for dealing with those arrangements. We have a shocking situation where semi-nationalised, nationalised or guaranteed British banks seem to take it for granted that they have a perfect right to avoid paying UK taxes—there has been no effective attempt to clamp down on that—and five months after the beginning of the capitalisation programme, that is simply not good enough.
	Another aspect of the banking issue is the future-looking exercise by Turner. I guess that most of us have not had time to read it in full, but we had a brief reprise of it from the Conservative Front Bench. Most of Turner's points are fairly uncontroversial. Clearly, the wrong model was pursued early on, but speaking as a veteran of the legislation relating to financial services, it is fair to say that there were not too many people on the Conservative Benches at the time who warned about light-touch regulation and its consequences, or about the problems associated with process regulation.

Gerald Howarth: May I remind the hon. Gentleman what he said just 10 years ago? [Hon. Members: "Just!"] In his lifetime, that is merely a passing moment. He said:
	"No one is arguing for an increasingly severe, more onerous and dirigiste system of regulation."—[ Official Report, 28 June 1999; Vol. 334, c. 55.]
	So he was not in the camp calling for more dirigiste and heavier regulation. He was on our side, not on the Government's side.

Vincent Cable: I am glad to be welcomed to the Maoist self-apology system. Actually, I argued in 2000, at the time of the Cruickshank report—if the hon. Gentleman goes back to the  Hansard record, as he was obviously primed to do, he will see this—that the banking system had to be more effectively regulated. I was the first person, and the Liberal Democrats were the first party, to argue that. I did so nine years ago, the year after I made the comment that the hon. Gentleman read out. I repeat, however, what I said 10 years ago: where institutions do not pose any systemic risk—and many of them do not—there is no justification for onerous, intrusive regulation.

Michael Howard: Before the hon. Gentleman indulges in a further orgy of self-congratulation, will he concede that, contrary to what he just said—and as I shall demonstrate with chapter and verse if I am lucky enough to catch your eye, Madam Deputy Speaker—my party did warn about the transfer of responsibility for supervising the banking system from the Bank of England to the Financial Services Authority?

Vincent Cable: The right hon. and learned Gentleman is quite right. The Conservatives did do so, and from day one, they have been consistent on that point. I have never entirely seen the force of that argument, however, because the whole of the banking supervision section of the Bank of England moved, lock, stock and barrel, into the FSA. The name and label was changed, but the same people were there. It is a perfectly valid point, and he is right to say that the Conservatives consistently warned about it, but it is not clear that that in itself made an enormous difference.

William Cash: The hon. Gentleman said that he thought that the Turner report was somewhat uncontroversial. Does he agree with the report's proposal that we should have Europe-wide supervision of the regulation of banking and financial services, or does he have reservations about that?

Vincent Cable: I read that bit because I anticipated such an intervention. Turner says, and he is absolutely right, that regulation should remain nationally based. There is clearly scope for more effective European co-operation; the hon. Gentleman may remember the chaos that resulted from the Irish breaking free last autumn, with separate guarantees on banks. Surely he will acknowledge that there are some things the Europeans have to do together, albeit within a fundamentally national regulatory system.
	Two major conclusions come out of the Turner report, one of which has already been mentioned. There is now general acceptance that the regulation of banks and bank lending has to operate on a counter-cyclical basis. The Conservative shadow Chancellor repeated that, and he is right; it is an important policy development. If he were more generous, he would acknowledge that my party was saying that five or six years ago, but none the less, we are on the same page, and that is the correct way forward. The other major issue that Turner is ambiguous about, unfortunately, is the much more important question of splitting banks so that the British Government and the taxpayer are not responsible for global banks, many of which have a large "casino" operation, as it was called by the Governor of the Bank of England. It is striking that it is not just distinguished Conservative Foreign Ministers and Chairmen of Select Committees who are arguing for a British version of what was called the Glass-Steagall approach; crucially, the Governor of the Bank of England has waded in, saying that that must happen. The only person on the record as opposing it is the Prime Minister, and I sincerely hope that the Government will take a fresh look at the matter.

David Davis: As the hon. Gentleman knows, I am a supporter of a British Glass-Steagall approach. Does he recognise that if we go down that route, it will allow much lighter regulation for large parts of the financial service sector, which is, after all, one of its main benefits?

Vincent Cable: The right hon. Gentleman is absolutely right, and some of the hedge funds, for example, continue to operate in a reasonably lightly regulated way, provided they have proper capital, if there is a system issue involved and provided that they are transparent. That is an important justification. It is not just a question of more severely regulating the retail operations of the banks.

John Redwood: Will the hon. Gentleman explain why it was the independent investment banks without commercial banking arms that went bust or got into deep trouble in America?

Vincent Cable: That rather illustrated the fact that those independent investment banks, like the investment banks that were part of RBS— [Interruption.] There is the case of Lehman Brothers, but whether they were inside or outside banks, they were high-risk institutions that posed a great risk to the system. Separating them from conventional high street banking seems a necessary step to bring greater stability to that system. Of course the right hon. Gentleman is right that both independent and integrated banks posed that problem.

Angus MacNeil: The hon. Gentleman mentions regulation. Perhaps he will recall the Prime Minister's speech to the CBI conference in 2005, which called for regulation to be limited and even suggested and hinted that perhaps there need not be any regulation at all. Would he care to speculate on whether that was a Stalin or a Mr. Bean moment?

Vincent Cable: I have already made the point about the balance of regulation, and I shall not pursue it.
	Although it is important that we talk about bank structures and the rest, the key issue today is unemployment. That is why it is absolutely essential that we pursue two major objectives. One is getting lending flowing again. The Government now have no excuse for not doing that, because they already own two of the largest banks in the country directly. The other is having not just a stimulus for the sake of spending public money but a stimulus that is effectively targeted at job creation, using the potential that is available, particularly in the construction industry.

Several hon. Members: rose —

Madam Deputy Speaker: Order. I remind hon. Members of the 12-minute limit on Back-Bench contributions.

Geoffrey Robinson: What a pleasure it always is to follow the hon. Member for Twickenham (Dr. Cable). In a previous debate on a similar topic, I complimented him on his prescience on these matters, which as we have seen today is matched only by his omniscience. I compliment him also on the national reputation for both that he has built up. If he has been so consistently right throughout these difficult times, it can only be for the wrong reasons in some cases. That, of course, is the cardinal sin. Whatever the details of the past, it is not worth going into them today. I do not even want to get into whether the situation started in America or here, because no doubt that will be a matter for historians. For the moment, the point is surely what we are going to do to confront the biggest crisis for 100 years or perhaps longer.
	The House has done itself a good service in its discussion of debt in this debate. It might have been a bit too technical, but underneath it is the fundamental point that we must consider: how serious are the debt levels that we have built up? Although debt will increase as a percentage of gross domestic product, all the best forecasts that I have seen are still projecting that when we are out of the recession in 2011 or 2012, we shall have a considerably lower debt as a percentage of GDP than Japan. The figure is out of all proportion there at more than 100 per cent., which is where we were under Supermac. I believe that the figure here will be less than that of the Germans and probably the United States as well. As a percentage of GDP, the figure is not so terribly frightening.
	I take the point, however, that everybody has made about debt. The Chancellor. spelled it out with great courage and good sense when he said that we would have to correct the deficit in the medium term, because it would not be sustainable for the level of debt to continue climbing during the recession. He said that it would not be tenable for the country to get into that level of debt.
	The Tories have tabled a motion stating that we have to deliver on the promises that we have made, every single one of which they opposed—from Northern Rock and the reconstruction of the banks to the fiscal stimulus. The cheek of it is quite unbelievable. The Conservative party must reconsider its untenable position of now supporting the Government's policy and condemning them for not delivering it, and at the same time saying that it is not working. I do agree that there has been some delay in getting those measures into the marketplace.

William Cash: The hon. Gentleman and I have had some altercations about the level of debt over the past few months. On 7 October last year, I disputed the figures given by the Chief Secretary when she said that debt was 37.3 per cent. of GDP. By the pre-Budget report the figure had risen to 43 per cent., according to Government figures. I believe that the hon. Gentleman described what I was saying at the time as apocalyptic nonsense, but does he not accept that the Office for National Statistics itself states in its current estimates that the amount of debt is a minimum of £2.2 trillion, which represents 150 per cent. of GDP? Can he not accept that from the ONS?

Geoffrey Robinson: I was making comparative judgments about other countries. If we treat their debt on the same basis as the Office for National Statistics treats ours, theirs rises pretty much in line with ours. I think that the hon. Gentleman was referring to the private finance initiative— [Interruption.] I beg to differ and we can continue the debate on another occasion.

William Cash: rose—

Geoffrey Robinson: I will not give way again—we have only 12 minutes and I want to concentrate on the one policy that the Conservative party has presented. They have clung to it and been almost mesmerised by it, but we know almost nothing about it except that it would encounter the same difficulties of implementation as our policies.
	The Opposition propose to guarantee £50 billion to industry—that is a big number. They claim that they will rely entirely on the banks' commercial judgment to administer it. Who in their right mind would go to the country at this time and say, "We're taking £50 billion off you taxpayers, on top of everything else you had to put into the banks, and we're going to trust the banks unconditionally to administer it"? It would not carry any element of credibility. The Opposition must do better.  [Interruption.] If the hon. Member for Runnymede and Weybridge (Mr. Hammond) listened, he would learn that the Opposition must establish criteria and get whatever collateral and the best security they can. I underline the latter point to my right hon. Friend the Chief Secretary.
	One cannot dole out public money without taking whatever collateral one can get. I agree with my right hon. Friend the Chief Secretary that we will not get the best collateral in the current climate. We are in that position because assets are wobbly, cash flows are uncertain, unemployment is rising and it is difficult for companies to borrow in the normal way through bank lending. Banks have been smashed by their irresponsibility in the duff loans that they have made. Yet the Opposition ask us to trust those very people to administer a scheme of £50 billion. That does not stack up.
	The Opposition have the further brazen cheek to say, "This won't be Government spending." So not one pound of the billions of pounds that the Opposition propose to spend, administered by banks, will be lost. Who could believe that? It is incredible that the Tories are pushing the Government to deliver on promises that mean spending billions of pounds while simultaneously claiming that they would not spend that money, but give some quango £50 billion to give to the banks to give to any old industry they think fit.
	The House must soon confront the problem, which is all over the papers, of LDV in the west midlands, where I am happy to represent a constituency. I do not want to prejudge the outcome of the case, but the company has been closed since December and had made losses in recent years. By its own account, its forward projections were entirely dependent on producing an electric van. It started off by saying that it needed £30 million or £40 million. Let us imagine that we took the Opposition's £50 billion, gave it to a bank and said, "Go ahead—save this company for us". It would be the height of irresponsibility. I do not know how the Government will come out of the case, but it shows the sort of difficulty that huge Government schemes pose.
	We must consider the balance of risk. Are we to risk taxpayers' money in a case, which one knows in one's head will not work a few years down the road, but will get through the next 18 months—after that, the money will be eaten up and the company has to close anyway—or are we to stand up in a recession and say that we cannot help? I do not want to prejudge the LDV case, but it shows the difficulties that can arise with Government-guaranteed funds. Such money should be counted as expenditure and a large element of public accountability must be built into the process. Difficulties are arising with that.

John Redwood: Why is our proposal more risky than taking over £3 trillion of assets and liabilities, including some dodgy ones, and running everything, as the Government are doing, through two banks?

Geoffrey Robinson: The £3 trillion is thanks to the commercial judgment of the relevant banks, to which the Conservative party would give another £50 billion. Attempting to establish control over such expenditure and setting out criteria, procedures, targets and minimum amounts of collateral, constitutes a much more sensible approach. It is as simple as that.
	Let me deal with the Turner report. I do not have a lot of time left—nor have I read the report in detail—but Turner attempts to deal with the problem of risk management and reward for it in the financial sector. If everything else fails on the wretched problem of Sir Fred Goodwin's pension, which will not go away, will my right hon. Friend the Chief Secretary consider introducing a Budget measure and make clear to him what we would do? That could be done by using a Ways and Means resolution to establish a new class of pension that would be taxed at a much higher rate. The new class would define precisely Sir Fred Goodwin's position, specifying the age at which the pension would become available, the time at which it would become available and its amount, and spelling out the rate of taxation that would be appropriate.
	I know all about the problems of hybridity—my right hon. Friend and I well remember the problems that we had in defining a class for the windfall tax, which was very tricky. We could not cover the ROSCOs——the rolling stock leasing companies—or the National Grid Company, which had not been privatised by flotation. I do not know how wide she would want to go, but in this case a class could be established—it could be a class of one person, if necessary—through a Ways and Means resolution in the Budget in such a way as to avoid hybridity. That would not be using a sledgehammer to crack a nut, but we are trying to crack a very big nut, and it is one that rankles with the public. My right hon. Friend only has to look at how President Obama stood up in the case of AIG—he made it clear that every legal means would be used to bring the great fraud of all those bonuses being paid to order—to see that the issue eats away at people until a boil appears. Until that boil is lanced, it will not go away.

David Davis: I agree with the hon. Gentleman. We all feel aggrieved at Fred Goodwin's pension, but his proposal will not work. Laws aimed at one person are invariably struck down by the courts. If he wants to get the measure of that, he should look at what happened when we tried to silence Brian Haw in Parliament square. The courts said that we could not have a law against one person.

Geoffrey Robinson: We would therefore simply have to extend the scope a little. Such a law would not be made against one person; it would be made against a class of people who fit certain criteria, even if only one person happened to fall into that class. That is a moot point, and we would have to fight our way through. However, I am sure that it is better that we are seen to be doing something rather than absolutely nothing and letting Sir Fred Goodwin walk away with several millions of pounds of his pension in what I suppose is a capital commutation, or whatever it is.
	Let me speak frankly to the Government about the delay in bringing forward the various schemes. All of us who have been in government or seen Governments working—most of us have in one way or another—know that getting decisions out of Governments is very difficult. On such big issues, which are cross-departmental and on which the Treasury has the ultimate responsibility, it is particularly difficult. The issues for the working capital guarantee would be the same as those for the national loan scheme, whatever happens, although I think that ours is much better, because it is targeted and timely.
	Whichever way we look at the VAT cut, it was timely and targeted, and it could be made straight away. That was the great thing about it. Whichever way we look at it, that is £12 billion going into the economy. VAT applies to 70 per cent. of prices and we calculated that the cut is worth £275 a year to families. I do not have a problem with the money going into independent companies and private sector profits, because a profitable private sector is what we need. We might come out of this recession with a private sector devastated and the public sector relatively healthy, and that cannot be good. Even if the money goes into profits, it has to go somewhere. If the consumer is not picking it up, it has to go into companies. If that is the case, fine—it will help the private sector.
	Let me return to the dyspepsia that seems to be affecting a couple of the big programmes—my right hon. Friend the Chief Secretary knows which ones they are. I would guess—I speak now without any knowledge of the situation—that the problem is the security that the Treasury is looking for. In a recession—this is going to be a deep one and some forecasts point to another 1 million unemployed still to come—the Government cannot get the sort of security that they can reasonably expect in a normal trading environment. In a normal trading situation, the Government will get good assets and take full charge of all the assets that they can get hold of.
	In the present situation, however, we might have to relax the strict criteria that the Government normally apply, in relation not only to the working capital guarantee—it is crucial that we get that out there and working quickly—and to the automotive programme. At the moment, that programme is drawn up in a very restrictive way, in that the capital investment needs to involve new, green technology in order to qualify. If we apply that criterion too strictly, however, it will probably impede access to the programme. Perhaps we need to take a more generic view. I congratulate the Government on the £27 million capital gift to Jaguar, which proves this point. Almost anything that any of the major car companies is doing today is favourable to the environment, whether it involves cutting down on emissions or weight, or decreasing petrol consumption. Everything that car manufacturers do now is directed towards being eco-friendly.
	I therefore have two points for the Government. On security, they need to get what they can get, but we must get the programme going, and they should take a fairly broad view of what constitutes an eco-friendly investment. Lastly, will they please not wait for full order books, but get the schemes going now? They are there, and the criteria have been set; we could get them going now, even if only on a modest scale to start with.

Michael Howard: It seems to me that we cannot arrive at the right prescription for the future of our economy unless we gain a clear view of why we are where we are. We cannot expect to be led out of our current crisis by a Prime Minister who puts his head in the sand. Before prescription, however, there must be diagnosis, and it is in that spirit that I offer my remarks this afternoon.
	Of course it is true—we can all agree on this—that we are in the throes of an international recession, or something worse. Of course it is true that almost every other country is affected in one way or another, to a greater or lesser extent, but we are almost uniquely vulnerable. We are almost uniquely ill equipped to deal with the calamity that has befallen the world, and we need to consider the reasons for that. They are not too difficult to identify.
	My right hon. Friend the Member for Witney (Mr. Cameron), the Leader of the Opposition, was quite right, last Friday, to accept responsibility for the things that we got wrong. We certainly failed to anticipate that the crisis we now face was anything like as serious as it has proved to be, but there are two main reasons for our present plight. Both of them were directly the responsibility of the Prime Minister, and, in respect of both of them, we certainly warned of the consequences. I have looked at the record, and I am in a position to answer the question posed from a sedentary position by the Exchequer Secretary earlier, when she asked, "Where were you?" I shall do my best to answer that question during the course of my observations.
	The first of the main reasons for our present plight that I, at least, have identified was the ill-advised decision, taken by the Prime Minister in 1997, to transfer supervision of the banking sector from the Bank of England to the Financial Services Authority. The Bank of England had hundreds of years of experience and expertise in supervising the banking sector of our economy. The Financial Services Authority was new. It had none of that experience and none of that expertise, and, as we know, it has since admitted that it fell down on the job.
	It has been suggested that the Conservatives criticised the transfer to the Financial Services Authority only with the benefit of hindsight, but that is simply not the case. When that catastrophic decision was taken, my right hon. Friend the Member for Hitchin and Harpenden (Mr. Lilley) was shadow Chancellor of the Exchequer. In the debate on the Second Reading of the Bank of England Bill on 11 November 1997, he said:
	"With the removal of banking control to the Financial Services Authority...it is difficult to see how and whether the Bank remains, as it surely must, responsible for ensuring the liquidity of the banking system and preventing systemic collapse."
	He went on to say:
	"The coverage of the FSA will be huge; its objectives will be many, and potentially in conflict with one another. The range of its activities will be so diverse that no one person in it will understand them all."
	That, at least, is one of the answers to the question posed by the hon. Member for Twickenham (Dr. Cable) a few moments ago. My right hon. Friend also said that he feared
	"that the Government may, almost casually, have bitten off more than they can chew. The process of setting up the FSA may cause regulators to take their eye off the ball, while spivs and crooks have a field day."—[ Official Report, 11 November 1997; Vol. 300, c. 731-32.]
	That was what my right hon. Friend said in 1997. The warning was there; it was clear; it was on the record; and it has, alas, proved to be absolutely prescient.
	The second main reason for our current plight is the level of indebtedness that we as a country, collectively through our Government and as individuals, have incurred. Here, too, there were warnings, and they, too, are on the record; I am afraid that some of them came from me. I drew attention on 9 July 2002 when I was shadow Chancellor to the savings ratio, which was then at an all-time low; it has hit many more all-time lows since. On 30 July 2003, I warned that savings had halved under Labour, that the Government were borrowing more and that families were getting deeper in debt. On 17 March 2004, replying to the Budget, I said that it was
	"a credit-card Budget from a credit-card Chancellor"—[ Official Report, 17 March 2004; Vol. 419, c. 337.]
	When I proposed at the 2005 election that a Conservative Government would make £12 billion of savings, I said that £8 billion of them would go not to cut taxes but to reduce Government borrowing, which was far too high.
	Of course, I was not always thanked—I suppose I did not expect to be—for my pains. Anatole Kaletsky in  The Times, for example, complained that throughout my tenure as shadow Chancellor, I had been issuing dire warnings about the economic and financial outlook. I had said, he complained, that Labour economic policies were doomed to failure, that overtaxed consumers were living in a fool's paradise of unsustainable borrowing and that the British economy and the Government's popularity were kept afloat artificially by a bubble of house prices and mortgage debt. He said that if the Tories started thinking along those lines, we would be making a big mistake. Well, of course, in terms of the outcome of the 2005 election, he was absolutely right, but was he right in the wider sweep of history? I simply set what I said on the record and leave others to decide who it was that was making the big mistake.
	Throughout all this time, of course, the Prime Minister was proclaiming that he had put an end to boom and bust—and you know, Mr. Deputy Speaker, I do not think he was trying to deceive us; I think he genuinely believed it. Perhaps the worst thing he did was deceive himself. It was because he was genuinely convinced that he had ended the economic cycle that he did not fix the roof while the sun was shining. After all, if we think that the sun is never going to stop shining, why on earth would we bother to fix the roof? As we know, the Prime Minister is still in a state of denial. That is not the least of the reasons why he is incapable of leading the country out of the mess we are undoubtedly in. It is, I am afraid, a very big mess indeed.
	A good deal of the comment on the current crisis seems to revolve around the question: how long will it last? It seems to me that another question is at least as important: what will come after it? The suggestion that is often implicit in the first of those two questions is that next year or the year after, we shall return to the world that we knew two or three years ago. That notion seems to me to be completely misplaced. We will be in a new world, a different world, with challenges every bit as formidable as those we face at the moment. We will be able to overcome those challenges only if we have leadership that is prepared, in the words of the excellent speech made the week before last by my hon. Friend the shadow Chancellor,
	"to confront some uncomfortable truths and tell people what they may not want to hear."
	The mess that my right hon. Friends will have to clear up after the next election will present them with a very difficult task, but I am sure that they will not be daunted. They will, after all, simply be discharging the age-old and historical responsibility of the Conservative party to clear up the mess that Labour has left behind. That is something that we have done before, time after time. It is, in essence, what the Conservative party is for. It is what we exist to do: to clear up the mess that Labour always leaves behind.
	The sooner we have that election, and the sooner my right hon. Friends can get on with discharging that historical responsibility, the better it will be for everyone in our country.

Laura Moffatt: I did not doubt that there would be a fair smattering of the "I told you so's" in today's debate, and I am afraid we have heard quite a few from Conservative Members so far.
	It was interesting to listen to the right hon. and learned Member for Folkestone and Hythe (Mr. Howard). I do not think we are judged solely on what might be called the "I told you at such-and-such a point that it was all going to go wrong" basis; I believe that we are also judged on the basis of the actions that we take. I well remember that when people around me in my local communities in Crawley were suffering devastation, little help—in fact, none—came from the then Government. In Crawley, the wise words sound a little hollow.
	This is a hugely difficult time for families. We are suffering in our communities. I say "we" because my own family is faced with redundancy, and with having to make very difficult decisions. Few Members on either side of the House will not have been affected by the global downturn, and the important thing for us to decide now is what action to take to ensure that we recover, become strong and can face the future with pride, and that people are fitted out with the skills that they need in order to move on.
	As Members of Parliament, we have an important role to play in our communities. We should be able to ensure that people have access to the schemes that are appropriate for them—that those schemes are clearly signposted. I hope and believe that Labour Members, at least, have been proactive in going out and explaining to local businesses what schemes are available.
	Of course we are impatient. If one person comes to us who has applied for a mortgage protection scheme and has failed to meet just one of the criteria—not having negative equity, for instance—that is a huge disappointment, although it should not prevent us from fighting to try to ensure that the home of that person and his or her family is secured. Impatience is expressed by Members throughout the House, including—quite rightly—the Opposition; but the Opposition speak as though nothing is being done, which is certainly and absolutely untrue. Business Link has been doing enormously good work in the south-east, carrying out health checks on our businesses to ensure that they are in the best possible position to fight off the recession. It does that work free of charge, providing invaluable advice and help.

Christopher Fraser: Can the hon. Lady explain how the Government's proposed increase in business rates will help small businesses to get out of the economic mess in which the Government have left them?

Laura Moffatt: I thank the hon. Gentleman for giving me the opportunity to say that we have also allowed businesses to defer rate payments so that they can plan for the future. They are expected to pay a reasonable amount in proportion to what they contribute to the community, but we are ensuring that they are not pressed too hard in difficult times. We heard from my right hon. Friend the Chief Secretary just how money has gone into that scheme, and I am very pleased that it has.
	The good thing about the organisations in our communities is that they have not just been writing to us, although I think we have all received letters from the Federation of Small Businesses about various schemes. They are also getting out and explaining to businesses just what is available to them. That is the difference between the Conservative and Labour positions: we have schemes and plans that are available, and business organisations are able to share information on them. Geoff Williamson, the chairman of my local small business federation, sees me in good times and bad. He visits me, and is able to talk about issues relating to the economy all of the time, which gives us a much better relationship when things are not so good.

Brian Binley: The hon. Lady always speaks up bravely on behalf of her constituents, but does she recognise that the building up of debt is a dangerous thing in itself for a business, because it could mean that it becomes legally not able to trade if the debt is too much and is unsustainable? Therefore, the projects she talks about, to do with holding back payment and building up such debt, could be the very death knell of the businesses she wishes to save.

Laura Moffatt: I am very grateful to the hon. Gentleman for that intervention, because it gives me another opportunity to say not only that Business Link can advise on issues to do with debt, but that other organisations, such as the Institute of Directors, are very clear that, for a healthy business, not building up debt to begin with is the right way to go. Having an enormous amount of debt and then having to defer further payments is a difficult position to be in, but we need to have these devices in place to allow businesses to plan for difficult times. That is exactly what we should be doing: giving this direct help to our businesses in our towns, cities and rural communities.
	A lot more needs to be happening, too. To deny that and say that public expenditure should be cut is a travesty of justice in respect of what is happening in many of our communities. Members always campaign for investment in their constituencies, of course, but if we do not make that investment at this important time, we will be creating tremendous difficulties for ourselves. Not investing in public services and cutting public investment would choke off many of the fantastic initiatives that are going ahead.
	I was listening to an Opposition Member saying that the proposed redevelopment of his college is not going forward. Well, that is not true of Central Sussex college in Crawley. We have an enormous proposal coming forward; it is planned work. It is an excellent college: it has just had a fantastic Ofsted inspection and is now rated as "good". In particular, the inspectors say that it is preparing people for the workplace—it is giving young people the ability to do the jobs that are needed so that they are in a position to feed our economy.

Philip Hammond: We are, of course, all delighted about the good news for the hon. Lady's local further education college—which obviously will have nothing at all to do with the fact that her constituency is the most marginal Labour seat in the country. Can she confirm, however, that she is aware that the rebuilding schemes of 155 other colleges that have had first-stage approval in principle are not now going ahead at the current time?

Laura Moffatt: I am explaining that I know that my college—Central Sussex in Crawley—is going ahead with such work.  [Interruption.] My hon. Friend the Member for Northampton, North (Ms Keeble) says that that is also the case in Northampton. Frankly, the hon. Gentleman's comments do not do justice to the principals, such as Dr. Russell Strutt at Central Sussex college. The college covers the constituency of the hon. Member for Mid-Sussex (Mr. Soames), among many others, and it is moving forward with its investment. This is not just about my constituency, and the comments made by the hon. Member for Runnymede and Weybridge (Mr. Hammond) do not do the college justice.
	Businesses can get themselves into a position in which they thrive and thus survive this appalling global recession by making sure that training is a continuing part of their business. It is at the core of making sure that the work force is able to rise to the occasion when needed. That is why it is so important to see the work being done in Crawley on apprenticeships. A growing number of companies are expanding their apprenticeship programmes to ensure that they are fit for the future. I am proud to say that both of the two producers of linear accelerators in Crawley, Varian and Elekta, have thriving apprenticeship schemes that our young people are desperate to get on because of the quality of the jobs.
	There is plenty that can be happening in our constituencies. I am always the first to say that we need to get more of these initiatives in place more quickly. One of the roles of a Member of Parliament is to ensure that if we have particular concerns, we can get to the heart of government and to our business organisations, in order to assist those in difficulty.
	Local authorities have an important role to play. When issues emerge to do with the delivery of schemes put in place by the Government, it is often because the schemes are being delivered by other institutions. It is difficult to keep a handle on just how institutions such as local authorities are performing and how quickly they are ensuring that all the initiatives are in place. I ask the Minister to ensure that we audit all those organisations—both county councils and borough councils—to see how quickly they are putting in place some of the fantastic schemes available to us.
	It would be very silly to assume that it is just working-class and other families who are suffering in this recession. We have to accept that there are those who are managing businesses who are in some difficulty. I have spoken to people running businesses who are close to tears when they feel that their business is on the edge. It is always really helpful to get Business Link involved to give them help and advice—that has been incredibly useful. When the economy is in difficulty, we need to think about the softer side: how do we support people in difficult times and give them the necessary help and advice? This morning, I spoke to the Rev. Jonathan Baldwin, who is the chaplain at Gatwick airport, and heard about the invaluable support that he is giving to managers and workers at the airport. We need to thank such people in this House, because although this global downturn is causing enormous pain and hardship, there are people out there who are keen to assist in ways for which we will never be able to thank them; we must know that they are in place, working.
	The work of the jobcentres has also been invaluable. I have been visiting them often and keeping an eye on the cases about which I have concern. The jobcentre in Crawley has responded enormously well, particularly to things such as the collapse of XL Airways. That was a devastating experience in Crawley, but the jobcentre opened its office at the weekend, interviewed XL Airways people who had lost their jobs in such a horrible way and got them into new jobs as quickly as it possibly could. The staff went much further than we would expect of public servants, and I thank them for the work that they do.
	There are clear dividing lines on this; we are able to discuss the initiatives available to us only because there are initiatives available to us. The proposals described by the hon. Member for Tatton (Mr. Osborne) are worthless with nothing to back them up. I am proud of the work that is being done. It is devastating to see the families affected at this time, but my hon. Friends and I shall work tirelessly to talk up the economy—and the contribution that people make to it—and to ensure that we are on their side.

John Redwood: Let us first of all get rid of some of the nonsensical soundbites that the Government offer us a substitute for serious analysis and debate. I am glad that the Government no longer talk of "no more boom and bust". Even they see how absurd that is, but it is disappointing that they still tell us that they made the Bank of England independent. As my right hon. and learned Friend the Member for Folkestone and Hythe (Mr. Howard) explained, the Government did grave damage to the Bank of England, which we highlighted at the time and continue to highlight.
	In the report by the group I chaired, which the Govt often misquote, we made a big thing about how the Bank of England was gravely damaged in 1997, which made it very likely that when a crisis struck the Bank would be unable to handle it properly. It was damaged not only by the removal of responsibility for financial regulation of the clearing banks—something that a central bank needs to do so that it knows the day-to-day positions and the true financial state of those banks—but by the removal of the responsibility to manage public debt. Anyone who understands money markets knows that public debt is the life and substance of the money market. The Bank of England was blind and deaf in its own money markets, because it was no longer in daily contact with clearing banks—one side of the equation—and nor was it handling minute by minute the Government debt requirements. No wonder it made an awful mess of the money markets in 2007 and 2008. No wonder it was not sighted in the massive credit explosion that the regulators allowed the banks to perpetrate, and that created this immediate crisis.
	We now have two more soundbites substituting for serious policy and analysis. One is that this is a global crisis, as if in some way that excuses the Government of all responsibility. Their refusal to understand that we have a worse version of the crisis than others is extremely depressing. Their refusal to admit that the global recession is happening for different reasons in different places means that they will find it very difficult to tackle the problem here in Britain. They do not seem to understand that the crisis is very different in Japan, Germany and China—the successful saving and exporting countries—from the crisis in Britain, the US, Ireland and Spain, the over-borrowed, over-extended credit countries.
	The exporting countries merely face the very serious problem that their export markets are temporarily very badly damaged, but they have strong fiscal positions and strong savings, while the heavily borrowed countries have a double crisis. We have the downturn in activity, like the successful exporting countries, but we also have extreme credit crunch problems, meaning that we do not have the financial flexibility to pump up our economies and return to previous levels of activity. The levels of activity reached in 2006 and 2007 were unrealistic, and were sustained on a sea of debt and those funny instruments that were allowed by the Government's regulation.
	The Government now say that the problem was created by deregulators, as if a deregulatory Government had been in charge in Britain for the past 11 years. However, never has more regulation been put on the statute book than in the past 11 years. Every feature of the financial regulatory system that they inherited was taken apart and recreated with far more cost, far more expense, many more regulators and far more complexity. Anything that has gone wrong on their regulatory watch is the result of their style and choice of regulation, and it certainly was not deregulatory.
	What we said in our economic review, which Labour Members love to misquote, was that we needed stronger and tougher regulation of banking cash and capital, and that that had to be done by a reunited Bank of England, which saw all the business and the money markets and understood them. We said that we did not need the new regulation of mortgage process that the Government had introduced. If we needed proof of that, we need only consider that we have had more mortgage process regulation than this country has ever known at the same time as we have had more dodgy mortgages than this country has ever known.
	Mortgage process regulation does not stop credit over-expansion. It does not tackle a credit crunch. I find it very odd that intelligent Ministers cannot understand that point; perhaps they deliberately misconstrue it. It seems so obvious to me that they were regulating the wrong things in the wrong way and that they were not doing what a regulator should do. When businesses can extend credit and lend lots of money to people and companies, we should control their cash and capital to ensure that they are prudent.
	The massive expansion in bank balance sheets should have been ringing alarm bells by 2004-05 in the Treasury and with the Chancellor, let alone in the Financial Services Authority and the Bank of England. It was ringing alarm bells on the Opposition Benches, as we have learned today. I shall not treat the House to loads more quotes or say that we saw all this coming, as that does not matter. What does matter is that the Government did not see it coming. They were not listening, they were not watching and they were not carrying out their prudential activities sensibly and well.
	What should the Government do now? They are making a worse crisis now than the one that they are talking about. We know about the over-expansion of credit, and they do not talk about how they brought that to a grinding halt in a very damaging way—that was the second part of the crisis. We might go into a third crisis if they do not control the public accounts and the public obligations sensibly.
	There are huge disputes about what should be factual matters. It seems very clear to me that this country is massively indebted in the public sector, and that that debt has expanded many times in the past two years as a result of the policies that the Government have been pursuing, both through their running of large deficits and, more importantly, through their very expensive policies of support, subsidy and guarantee to the banking sector.
	Let us look at the figures. The Government admit—I think—that there is public borrowing of about £700 billion. If we add in private finance initiatives, public-private partnerships, Network Rail and some other off balance sheet liabilities, we see that that figure is about £1 trillion. I hope that they would accept that figure.
	There are, too, about £1 trillion-worth of unfunded pension liabilities. The Government can say that it is not convention to put them on the balance sheet in state accounts, but it is convention to put them on the balance sheet in the corporate sector. Indeed, it is a legal requirement to do so—imposed by this Government and strictly enforced. The hon. Member for Twickenham (Dr. Cable) might think that I have made a mistake and I am misrepresenting those figures, but I assure him that pension liabilities are liabilities of the state. They represent money that we do not have and that we have to pay out.
	On that basis, the figure is £2 trillion, but to get the Government's true financial position we then have to add something for the banks. If we took on the Government's private sector accounting rules, we would have to put on the balance sheet the gross liabilities of the banks that we have bought, in the proportions of the shareholdings that we have acquired. That would add another £2.5 trillion—for the banks, the liability is £3 trillion, and we own most of that. That adds up to £4.5 trillion.
	Of course, those banks have some assets. I am pleased to say that we will not lose £2.5 trillion, but I fear that we will lose quite a lot of money on these banks. We have, after all, already lost £24 billion in about six weeks on the RBS shares that we bought, based on the losses that RBS has had to report after the shares were purchased. We have lost £10 billion on the HBOS shares that we have bought so far, based on the losses that HBOS has had to report through its profit and loss account. The losses on the shares, based on the current share prices, are similarly very large figures. We can lose a lot of money on this.
	If Government Members still do not like the idea of putting those gross amounts on the balance sheet in the way that a company would, why not put on the specific guarantees, subsidies and injections, which would amount to about £1 trillion?

Brooks Newmark: The Chancellor has asked the banks to be transparent in their accounting only this past week. Is this not a case of "Don't do as I do; just do as I ask"? The Government should at least be making what is going on off balance sheet as well as on balance sheet far more transparent.

John Redwood: Of course they should. The Government should not think that everybody outside in the real world is a fool. The outside markets and commentators are already adjusting for all these figures anyway, so why do the Government not get real and accept that they have to introduce them?

Peter Bone: Is it not a fact that international accounting standards require them to do so? There are no ifs and buts—the Government have to consolidate.

John Redwood: The Office for National Statistics is going to demand quite a big recognition of these banking risks. That recognition may not be for the full amount that I have suggested, but it will take our total indebtedness as a country, as defined by the ONS, to well over 150 per cent. of national income. That is well above many comparable countries around the world that have not blundered into so much bank ownership as this country has through the actions of the Government.
	What should the Government do to start to cut the risk? First of all, they must recognise that the risk is colossal and that, if they get it wrong, taxpayers could be left hopelessly stranded and have to pay enormous losses. They must recognise that house prices are still falling, that the mortgage experience is deteriorating and that there could be more bad loans than we know about. They must recognise that the corporate sector is in deep trouble—I fear that there could be many more bankruptcies in the months to come—and that corporate loan books are still deteriorating at a terrifying rate.
	For some unknown reason, the Government have made the taxpayer stand behind all those problems. Although a central bank must make sure that a main bank does not go under, it should do so through short-term lending. It should act as an intelligent bank manager and tell the bank involved to cut its costs and risks and to close down its casino banks. It must tell that bank to stop paying people £200,000, £300,000 or even £400,000 a year when they are making colossal losses that the taxpayer has to stand behind. It is grotesque that we, the taxpayers, are now expected to stand behind people who want to earn £200,000, £300,000, £400,000 or £500,000 a year, with pensions to match, even though their banks are loss making and need state capital and subsidy to survive.
	I am a well known exponent of free enterprise capitalism. I am all in favour of people in the private sector getting great bonuses and lots of money if that is what they deserve and if they do it in the normal way, but I also think that they have to live with the downside. High rollers who get it wrong should get no benefit from doing so, and it is deeply offensive to many people in this country—and I am sure, in their honest moments, to many Labour MPs as well—that this Government are far too generous with the subsidy and capital that they give to the broken banks. The result of the Government's actions is only that there is a delay in adjusting those banks and getting them sorted out so that they are in a position to behave normally again.
	The banks involved cannot be subsidised into lending more: they have to be sorted out to lend more, and that means getting rid of the rubbish. They must sell some of their foreign banks and some of the assets that are good so that they can get cash to do something with. There has to be a patient and difficult case-by-case analysis of every loan on their books, and there also has to be some intelligent banking to see how many people can be got through the crisis and how many unfortunately cannot. For the latter category, it may be better to close the loan down quickly before there are more broken dreams and more lost money.
	The Government will find out—as I think that they are beginning to—that owning something means being responsible for it. By all means let us have intelligent and able people who are not politicians or civil servants running the banks that the Government own on behalf of the taxpayer, but they have to do so according to a sensible and understandable remit from the Government. They are not being given that remit, even though it should be very simple: cut the risk and the losses, get us out of dangerous things like investment banking activities, and sell some of the good overseas banks because we need the money and should not be standing behind them.
	The Government have placed the country at grave financial risk. They were warned, but they ignored the warnings. They blundered because they regulated, and over-regulated, but they did not regulate the thing that matters. Will they now please concentrate on the thing that matters? That is that we now have, on the taxpayer's account, two broken banks that are bigger than the national income. Do the Government understand how risky that is? Will they issue immediate instructions to cut the risk? Will they understand that the British people will not put up with, or be grateful for, paying enormous salaries to people for doing the wrong things in broken banks that then lose us a packet?

Michael Meacher: At least I agree with the right hon. Member for Wokingham (Mr. Redwood) on his last remarks, about paying massive bonuses and pensions to people who have brought their banks down. He gave us the benefit of his wisdom—his speech was full of "I told you so's"—and rightly drew attention to the background to the present crisis, but he needs to be a little careful not to skate on rather thin ice.
	The build-up of debt through credit and housing bubbles, the deregulation of financial markets, the removal of the capital adequacy ratios from the reserve requirements of the Bank of England, the development of private equity and hedge funds, the light-touch regulation in the City and the development of the bonus culture were all main characteristics of the uncontrollable boom of the Thatcher era. One needs a little more humility and a little less "I told you so."

John Redwood: Does the right hon. Gentleman realise that Baroness Thatcher left office more than 19 years ago, and that when she did, the banks were carefully controlled and had to have a lot of capital relative to their loan books?

Michael Meacher: I was referring to a boom that led to a most serious bust between 1990 and 1992. That bust was the result of the boom being allowed to get out of control, so I do not think that all the lessons are on one side. As I say, history points to a rather different story.
	The debate hinges on the fact that the Government have always rightly insisted—I do not think that anyone really disagrees with this—that they had to save the financial system from total collapse in order to preserve the real economy from deep recession by restoring lending to business, preferably at pre-crunch 2007 levels. What has actually happened—here I agree with what the right hon. Member for Wokingham said—is that unimaginably stupendous sums of taxpayers' money have been spent on recapitalising the banks and insuring them against their ill-acquired mountains of toxic assets. However, lending to businesses and home owners has hardly increased at all, although such an increase was the whole aim of the exercise. Indeed, the banks actually decreased lending in the last quarter of 2008, and they announced not long ago that they are reducing it further in the first quarter of 2009.
	That in turn has forced the Government to try to substitute for the banks turning off the taps by increasing their lending to some stricken parts of industry. A notable example is the car industry, but the Government have also increased lending to some other industries. That substitution cannot possibly be more than extremely limited, because the deficit in the public accounts is already enormous, and it can certainly never begin to measure up to the scale of normal bank lending to the economy, which usually runs at about £500 billion a year. The fate of the whole economy continues to depend on the banks.

Peter Bone: The right hon. Gentleman is making a powerful speech, and I am grateful to him for giving way. Does he see the dilemma faced by the banks? The Government are saying, "You must lend more money to business" on the one hand, and "You have to get your capital ratios up" on the other. How can banks do both?

Michael Meacher: That is a relevant point. As the hon. Member for Twickenham (Dr. Cable) said, what is desperately needed is a clear statement of governance if the banks are to resolve those issues. In my view, if the banks are to have the state behind them, restoring lending to the wider economy should take absolute priority. That is the overwhelming requirement, and that is the central point that I wanted to make.
	The policy has been eye-wateringly costly, yet it has not even achieved that one main objective. It is bitterly ironic that a different strategy not only could have achieved that main objective in full—it could still do so now—but could have done so at a fraction of the cost, and I want to show how. Why was that different strategy not followed? This is probably where I part company with the right hon. Member for Wokingham. There was just one thing blocking the use of that strategy, but that one thing is, I suspect for both Front-Bench teams, the biggest inhibitor in the entire neo-liberal lexicon: the horror of the public sector. The amount of money that has been spent on avoiding it is truly prodigious.
	Some £26 billion was spent initially on Northern Rock—a sum slightly larger than one third of the entire nation's education budget—but the Government were still forced to acquiesce, reluctantly, in nationalisation. A year later, in September 2008, the Government spent £42 billion bailing out Bradford & Bingley. A week later, they made £300 billion available for a credit guarantee scheme, plus £200 billion for a special liquidity scheme and £37 billion for a bank recapitalisation plan. The banks, of course, were delighted; they took it all with relish. They used it to consolidate their balance sheets, but they increased their lending very little, if at all, so the Government went further. In January this year, they offered another £55 billion to protect the banks in respect of corporate debt. Last month, they made available a further £500 billion for an asset protection scheme to cover bank losses. Altogether—this figure has already come out in the debate—the Government have offered some £1.15 trillion to the banks, a sum equivalent to 78 per cent. of the UK's entire GDP, yet still bank lending to business and to household customers is stuck at a level that is causing business bankruptcies and joblessness to rise.
	The obvious question is whether there is or was an alternative. I believe there clearly is. That is best illustrated by the RBS saga. After the catastrophic takeover of ABN Amro, RBS, as we all know, chalked up in 2008 the biggest corporate loss in British history—£28 billion. So the Government stepped in with a £20 billion recapitalisation for the stricken bank. Even that did not staunch a massive further slide in the RBS share price, and by 20 January this year RBS stock, which was worth £78 billion in 2007, had had its value reduced in the marketplace to less than £4 billion, a staggering loss of 95 per cent.
	The Government then provided yet another £25 billion recapitalisation. What all that means is that instead of trying to bribe RBS and, of course, other banks, although RBS is the classic example, with colossal subsidies to increase their lending into the wider economy—an objective that we all want to see, although there has been extraordinarily little success in respect of the sums concerned—the Government could have taken over the bank at a tenth of the cost and thereby, with proper governance, secured the full increase in lending that was desperately needed.
	The key point, and the overriding argument that needs to made time and again, is that if the banks had the state behind them—this is in answer to the second intervention—they would no longer need to bolster their balance sheets at the expense of the rest of the economy. That is a prize worth having in the current meltdown.
	The same benefits of a takeover, as opposed to near-bankrupting the country by shoring up failures, would apply in the case of other banks. I shall give another example. With its very high level of toxic assets threatening now to bring down the whole new Lloyds banking group, HBOS, which was valued at £35 billion a year ago, could instead have been bought in the stock market for £6 billion last October. Instead of £11.5 billion of taxpayers' money being pumped in to assist the merger with Lloyds TSB, it could have been purchased at half the price and—this is quite important—the merger that is dragging down Lloyds need not have taken place. The cost via the public ownership route of returning to full-scale lending for the economy would therefore have been hugely less than under current policy, and also than under the Opposition's national loan guarantee scheme, which I do not think would have achieved the same objective.
	Admittedly, and here again I slightly differ from what the right hon. Member for Wokingham said, £1 trillion or more of public funding is currently at risk to assist the banks, but I assume that only a portion of it will be used, although we have been told that RBS wants to shift £325 billion of toxic assets into the asset protection scheme; and Lloyds is now thinking of transferring £250 billion, while Barclays is waiting on the edge. As long as it does not get into public control, it wants to put all its toxic assets, running to a few hundred billion pounds, into that scheme.
	Even if one leaves that aside—I do not think that we can quite leave it aside, it has been estimated— [ Interruption. ] I take that point entirely; it is a high risk policy.

Angus MacNeil: Will the right hon. Gentleman give way?

Michael Meacher: I must finish; I cannot take any more interventions.
	It has been estimated—no one knows for certain about this; it is only an estimate, but it is from a reputable financial authority—that the public accounts may well reach a deficit of £175 billion to £200 billion by the end of the next financial year. That is an astronomical figure, and recovering from such a deficit could take several years. That is one powerful reason for not going down the route of the toxic assets protection scheme and these repeated capitalisations. But I continue to think that the overriding argument for the public ownership alternative is that rapidly restoring normal levels of lending—I do not believe that there is any other way of doing that—within the economy would largely prevent the enormous cost of rising bankruptcies and joblessness, which we are told could rise to 3.5 million, which we are now seeing throughout the economy.
	There is one other argument. The Prime Minister has been saying recently that the days of laissez-faire capitalism and market fundamentalism are over. With great respect to him, they are not. The whole Goodwin display of shameless greed and the enormous bonus awards for failure of the RBS and HBOS directors just make monkeys out of the Government, as do also the extraordinary contortions dreamt up by Barclays to preserve its bonus culture intact, from Bob Diamond's £36 million a year downwards, plus its aggressive, convoluted tax havens maze, robbing the taxpayer of, it has been calculated, about £1 billion a year. Against that background, as we have seen in the last few days, the Chancellor is reduced to publishing soon a code of practice, which is not enforceable, unless he makes it enforceable in some way, stating that the banks are expected—expected—to obey the spirit as well as the letter of the law. I can only put it to the Chancellor that the only way to end this humiliating charade, with the banks running rings round the Government, is public ownership. I am quite prepared to say that it should be temporary; I am not in favour of public ownership for its own sake, but—temporarily at this time—it seems to make a hell of a lot of sense. That is the only way we can achieve what is needed.
	It is almost incredible that such an obvious common-sense solution is derailed because of extreme ideological aversion even to the faintest whiff of public ownership. It exposes more sharply than anything that I can think of in recent years just how deeply embedded is that ideology in the minds of the political and economic leadership of this country. That probably applies to both parties. I think it is the defining element of the neo-liberal era. Adopting the most obvious, pragmatic and appropriate solution to public ownership at least cost in the current financial meltdown is not an ideological stance, but rejecting it out of hand certainly is, and the Government should think again.

David Davis: It is always a pleasure to follow the right hon. Member for Oldham, West and Royton (Mr. Meacher) because he matches eye-watering damage to the economy with eye-watering honesty, and we always know that he means exactly what he says on these issues. I suspect that many Opposition Members agreed with probably three quarters of his analysis, although perhaps not the last few words.
	We are not unused to hearing people now argue that this is the end of free market capitalism or the fault of free market capitalism. We are also used to hearing people refer to the 1930s and cite Keynes as the solution. With that in mind I had a look back at what I remembered from a biography of Keynes and found one of the last things that he said about resolving some of the economic problems of his day—not that dissimilar from those we face today. He said:
	"I find myself more and more relying for a solution to our problems on the invisible hand which I tried to eject from economic thinking 20 years ago."
	So he, after two world wars, the tragedy of the gold standard and the tragedy of the 1930s, during which many of our grandfathers spent their time on marches or hunger marches, he came back to the thought that whatever we do, the answer to a recession, the answer to a depression, is to make the economy grow again. What we must not do, in curing one of the problems that we have, is poison the whole economy.
	I shall go through Keynes's analysis, but come to a slightly different conclusion. He also recognised, probably more than any economist before him, the importance of confidence; he first referred to it as "animal spirits", the driving part of the economy. He recognised that confidence was ephemeral, but that it was not irrational.
	If it is difficult to raise capital and get loans, if markets are uncertain and if there are problems of demand or lack of demand—indeed, if there are prospects of high taxation in the future—confidence is enormously harmed. My point is that the Government's management of this issue in the past year or two has added dramatically to our problem; it has reinforced the position highlighted by the IMF—that we will probably face a longer recession than anybody else. There are many other structural reasons, but that is one of them.
	At first, that was almost inexplicable to me. Why were the Government so slow, timorous and ham-fisted about their handling of the banking crisis? After all, there is no shortage of examples of how—and, indeed, of how not—to handle one. Anybody who understands capitalism will recognise that banking crises are not that unusual. They happen quite a lot, and there have been a few in the past decade or so. This is not a new point, but it is now widely recognised that the Swedish banking crisis was handled well and that the Japanese one was handled badly. Interestingly, the Government have mimicked not the Swedish example, but the Japanese one. What is the difference? Each country started—like all Governments, ours included—by underwriting the bank depositors. That was quite right; that is how to stop a run on a bank. It is straightforward, although expensive in some senses, and it has to be done. There is no choice about that stage.
	It was in the second stage that the Government deviated from the Swedish example. I hope that the House will forgive me if I recount that example. The Swedish Government said to their banks, "You will identify the full extent of all your losses and liabilities before anything else happens. If you do not, there will be no support." That is a clear and brave thing to do; perhaps our Government did not do it because it is so brave. What is the advantage of that approach? First, it makes the shareholders meet the losses first, as is entirely proper in a capitalist economy; that also reduces the taxpayers' loss. Secondly, it pre-empts all the problems of bonuses, pensions and pay-offs that shame all of us who believe in a free market economy. Shareholders who have just lost their entire wealth are not about to stand for that sort of behaviour; Lord Myners might, but those shareholders, I am afraid, will not. Thirdly, the approach identifies the banks in three categories: those that do not need help; those that can reasonably use help to serve the nation's needs for borrowing and industry capital formation; and those beyond recall—those now known in the parlance as the "zombie banks", which are the dead banks to which we are still giving transfusions of taxpayers' money.
	The approach is tough, but it is a necessary precursor of what we should have done in this crisis. That shock action in Sweden stopped what is known as a liquidity asset spiral—the continuing reduction of the assets on which the banks base their value and activities. It was predicted that the disposal of toxic assets in Sweden would take 10 years; the vast majority was done within three years. What was the cost to the nation? If we count interest, it was 2 per cent. of GDP; if we do not, it was nothing—zero—because the issue was addressed up front. The action stopped, throughout the whole Swedish economy, what is known by the technicians as payment uncertainty: the fear that the next customer will not pay the bill, and the fact that someone cannot get credit insurance. Such things vanish when the problem is dealt with.

Angus MacNeil: I am listening carefully to the right hon. Gentleman. Before the Government intervened, people in the press were highlighting what had been done in Sweden. The Government seemed to adopt, as he said, what the Swedes did, but a toxic bank has not been set up to carry toxic assets in this country. I would like to hear his views on that.

David Davis: The Government did not do what the Swedes did. They did not carry out that up-front identification. The best example of that came during the past couple of days in relation to the Lloyds-HBOS merger, which was forced through incidentally by stopping the action of our competition laws. That was wrong; this is what they are for to a certain extent. The merger was forced through so fast that Eric Daniels, an extremely good banker until this point, had to admit to the Treasury Committee that he did not carry out due diligence. It is the first time in my political and business career that I have ever heard of a major acquisition taking place without due diligence. What have we done? We have taken one destroyed bank and probably created two destroyed banks. Once we have the relevant information, we can make rational decisions about what to do about individual banks. If a bank is dead, it does not mean that the depositors disappear or that the loans disappear, but it is necessary to break it up and parcel out the components to others who can better manage them. That did not happen in this case, and it was a great failure. I am sorry to say that it amounts to a failure of courage.
	I only have a few minutes, so I shall talk briefly about the Turner report, but before I do so, I will make just one comment on the other aspect of demand management—handling the other elements of the downturn in the economy. There are good reasons for public works investment during a recession, but probably demand management is the least good of them. I do not have time to go into the matter in detail, but all we have to do is look back at the supposed great revolution of Franklin Delano Roosevelt in the United States. In the 1930s, the United States had five years of bad recession, and did not recover to its trend growth until 1942, in the middle of the second world war. We had Treasury officials who were very old-fashioned and resisted Keynes, and we had two years in recession and were back on trend by 1937. We ought to be a bit careful about assuming that such actions will work because they carry a lot of consequences.
	We have a structural problem to deal with. I mentioned to the hon. Member for Twickenham (Dr. Cable) earlier that the US and the UK have independently pushed their aggregate spending way above GDP—to 3 or 5 per cent. above that level. That is a detailed variant of a structural problem in the world as a whole. In America, household consumption is 70 per cent. of GDP; our household consumption is about 63 per cent. of GDP; and Chinese household consumption is 40 per cent. of GDP. The consequence is a massive flow of money, which still goes on and is unsustainable at those levels. At the end of the day, whichever Government deal with the matter will have to resolve the problem in the long run of bringing aggregate spending into line with our economic capabilities.
	I have only had a chance to see the summary of the Turner report because a copy has not been put in the Vote Office—at least not when I was able to go there. In essence, Turner calls for anti-cyclical asset requirements, which is very sensible. That policy did not save Spain, mind you, but by itself it is worth while, although not a game-taker. He calls for a general increase in capital-asset ratio levels, which is fine. That is very sensible, but expensive for the banks. He asks for balance sheet rules specific to risk, which is also sensible.
	I really would like the Minister to respond to what I have to say on the FSA's attitude. Historically, the attitude of the FSA has bordered on the criminal, partly because it has been the victim of a massive confusion of aim. For example, there used to be something called the regulation T scale. It encouraged the movement of assets from American balance sheets to British ones because they did not meet regulations properly put in place in New York, which were set out by the Securities and Exchange Commission in its regulation T. That was actively encouraged by the FSA, with the result that we had a large quantity of poor-quality assets on British rather than American balance sheets. We should ask, for example, why nearly all of AIG's losses were in London, why so much of the securitised mortgage asset base was in London and why most of the companies involved will never pay taxes in my lifetime because of their accumulated losses. That situation is the result of a massive confusion of aim by the FSA, which actively encouraged it in the fond thought that it was a way of helping the City of London. In fact, it brought very low-quality business to the City.
	The problem is that checklist regulation almost never works very well. That is what the FSA is based upon—a tick-box approach to regulation. It is worse in complex systems, because people find ways around it, and in fast-changing systems. When the two of those come together, as in most of the investment banking sector, there is a very difficult problem to resolve. The intelligent thing to do is separate out the part of that sector which matters most to us and the economy and which we cannot afford to fail—namely the high-street and commercial banks.
	The real answer—not the short-term answer but the long-term structural answer—must be to separate the commercial banks from the investment banks, so that we can regulate the commercial banks tightly, ensure they provide capital for everything from mortgages to business loans. At the same time, that would enable us to allow a much lighter regime for the area that needs to be innovative. That is not just my view but that of Paul Volcker, Nigel Lawson and, I gather from what the hon. Member for Twickenham said, the Governor of the Bank of England. That seems to me the only way ahead for our financial sector.

Several hon. Members: rose —

Mr. Deputy Speaker: Order. To use the lingua franca of the day's debate, I intend to impose a light touch of regulation and reduce the Back-Bench speaking time to 10 minutes when I call the first hon. Member after 5 o'clock, to try to accommodate more Members.

Doug Henderson: It is a pleasure and a privilege to take part in this debate. When I looked at the Conservative motion, I thought it was somewhat lightweight and out of touch, that it did not address the issues and that it was politically provocative. I have to say that the speeches that we have heard, including those from Conservative Members, have not been like that. A number of them have been very thoughtful and interesting. I have not agreed with all of them, although I have found myself in agreement with certain elements.
	During the speech made by the hon. Member for Twickenham (Dr. Cable), we were getting into a debate about what was good debt and what was bad debt. I had thought about that before, but I began to focus on it in a way that I hope is a bit more effective. In debates such as this in the past, we have all had strong views about what levels of deficits on borrowing are sustainable in the economy, what level of long-term debt we could live with and the role of automatic stabilisers, which is a big issue between the United States and Europe. We have all had views about regulation, and most of us who have taken part in these debates over the years have words to say about it.
	The conclusion that I am coming to is that it is actually best for us to forget about what we have said in the past. Perhaps it will be relevant when history is written, but we will not move forward as a nation if all we do is throw abuse at each other about what we have said about these and other issues over the 10 or 20 years for which some of us have been in the House. Some of us have been in the House a little longer and have doubtless thrown the abuse for longer.
	I got things badly wrong in a speech that I made in my constituency about 14 months ago, when I said I did not believe that there would be a severe world recession. I believed that the Chinese and Indian economies would be sufficiently buoyant to ensure that the rest of the world did not get dragged into a deepening recession. When I campaigned for the then Senator Obama in Illinois in June, I took the opportunity of visiting a banking friend in the United States, and he said, "You've got this wrong. This is pretty serious—we don't know how bad it is, but it's grim." That is where we are now.
	I do not know whether the recession is the equivalent of what we had to endure in the 1990s or the 1980s, or something that we experienced in recent history only in the 1920s and the 1930s. The right hon. Member for Haltemprice and Howden (David Davis) quoted Keynes. I do that occasionally, but I would like to cite a neo-Keynesian this afternoon—J. K. Galbraith. When he gave evidence to the congressional committee on the economy in 1954, when the Americans believed that another fairly deep recession might be beginning, he said that the problem in 1929 and, to some extent, in 1954, was where the wise got their wisdom. That is our position in 2009.
	We are all in territory of which we have little experience and where we have little background on which to draw. In many ways, we are making a stab in the dark. President Obama recognised that when he told the United States Congress that the Administration would give unprecedented amounts of money to try to stimulate the economy, but that it might not be enough and that they might have to go far further in future. We are all in that position, and it is not easy.
	I am supposed to be a little party political in my contributions. Conservative Front Benchers did not do justice to the debate about where we are as a nation and where the international economy is. Some Conservative Back Benchers did justice to it, but Front-Bench Members did not address the matter. Why? Are they frightened to tackle the real issues because the drift is against the ideological one that they want to offer the country? Are they unprepared to face up to the new economic situation? The hon. Member for Twickenham reminded us of historical debt and that it is not especially high at the moment. It has been much higher in wartime.
	If one is trying to build consensus in the nation, which requires a policy of economic stimulus that depends on building up long-term debt—there is no other way for any nation in the world; although debt has been 40 per cent. of GDP in the recent past, all the predictions that I have seen are that, in the United States, Germany, Japan and other countries, it will increase to 60 and 80 per cent., and we will be with the rest of world—one cannot rubbish the concept of national debt. One cannot have an economic stimulus, which has an immediate effect, unless one runs a higher deficit than in the recent past.
	Broadly speaking, according to exchange rate mechanism rules, recent deficits have had to be within 3 per cent. They are moving ahead of that in all European Union countries, and that will happen in Britain. If Conservative Front Benchers believe that an economic stimulus under some international agreement is essential to get Britain out of the economic recession—or depression—they cannot rubbish deficit financing, which is a crucial part of it.

David Davis: Let me make two points about the hon. Gentleman's comments on debt. First, as I said to the hon. Member for Twickenham (Dr. Cable), we are no longer a reserve currency and our credit worthiness is now in question. Two countries have already had their credit worthiness reduced. Secondly—this is a problem that the hon. Member for Twickenham did not address—there is overall external debt, private and public together. It is now about 400 per cent. of GDP, three quarters of it payable in the next year. We have a serious credit worthiness problem and, if we go over the cliff, that will do much more harm than small-scale public spending.

Doug Henderson: I understand the right hon. Gentleman's point, and if I had stuck to my speech I might have come to it myself. However, as long as we are moving broadly in line with the changing debt and deficit financing levels of comparable countries—the United States, Germany, France, Japan and so on—and as long as we are moving on the same track, even if it is an upward track, I would not expect that confidence to go. As long as that confidence does not go, the relative strength of the currency will be retained. I understand the worry, but with a little careful engineering, we can avoid falling into that trap.
	I do not have enough time to respond to the right hon. Gentleman's other question in detail, but the whole of world trade will break down unless there is an international agreement between the countries that are running surpluses and those that are running deficits to act together. That would mean the Chinese starting to spend a little more in China, which would mean that they would not have to export so much, which in turn would mean that we would not have to import so much from China, meaning that we would not have such difficulties with deficit financing. Provided there is an international agreement to take that on board, we will find a way out of this mess.
	Those on the Conservative Front Bench have to face up to the hard-line decisions. They have to recognise that the enemy is not inflation. The enemy was inflation for a number of decades, but the enemy today is deflation. The great danger is that we do what was done in the 1930s. Before Keynes got his way and before Roosevelt introduced the new deal in 1933, the world economy was in a serious position. Instead of trying to stimulate the economy by having programmes of public expenditure and keeping interest rates as low as possible, we had the opposite. In the early days of the recession, in '29, '30 and '31, we had high interest rates. We even put interest rates up initially, until we realised the folly of doing that.
	When interest rates went down, the economy did not respond to them and people said, "What now?" It was at that point that Keynes said, "You might want to have some public expenditure"—the right hon. Gentleman and I might agree at least on what was said historically. Today we are in the same position. We have a choice of ways to stimulate the economy. We can have some tax cuts—I think that that will be essential—to give a boost quickly. I am not a 100 per cent. believer in the VAT cut, but whatever one might say about it, it is a quick way of having an effect throughout the economy. We need to look at the VAT cut again in a year's time and see whether it has had an effect. I suspect that my initial reaction was wrong and that it will have more effect than I thought it might.
	We also need programmes of public expenditure as the economic stimulus is taken forward, and we have choices on what that expenditure should be. Some aspects of public expenditure are automatic—they just happen, because of the stabilisers in the economy. That is usually pretty good, because people who need the benefits usually spend the money that they get, which is good for stimulating the economy in the short term. If the Minister is going to give us a taste of what might be in the Budget, I hope that we might hear something along those lines.
	On public expenditure on public works, as it were, there are various areas of our economy where we have obvious needs. We need to get parts of our transport system right and now is the time to do that. We need to spend money on education and skills to ensure that when we come out of the economic difficulties that we are currently in, we have people who can take up the future challenges and compete internationally. There has been talk around the Chamber of cuts in expenditure for further education colleges, but that is not true.

Peter Bone: rose—

Doug Henderson: No, I am not giving way.
	In macro-global terms, there have been increases in this country both in expenditure on further education and in capital budgets. That seems to be a sensible way of using our public money to get us out of the position that we are in.
	I offer a word of warning: at the G20, we must take every possible step to avoid the inevitable protectionist pressures. No matter what plans we have to adopt an economic stimulus that is agreed within certain limits, if serious protectionism breaks out, that will all fall away, as it did in the early 1930s, prolonging the recession as a result. If we allow protectionism to take over now, it will prolong the recession not only in this country but worldwide.

Gerald Howarth: By common consent, we are facing the worst recession in a generation and, as each day passes, we hear more and more gloomy reports. I fear that matters will get very much worse before they get better, and that our constituents have cause to be anxious. For 10 years, the Prime Minister has posed as the man whose command of economic affairs was so all-embracing that he had abolished boom and bust, and thanks to whose stewardship and management of our economy, Britain led the world. There was no acknowledgement of the role played by my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke), or, indeed, of his predecessor, the noble Lord Lamont for his legacy of a successful economy, which was bequeathed to this Labour Government. That was, of course, all the work of the brilliant incoming Labour Chancellor, whose endless skills stopped short only of alchemy.
	Suddenly, however, as everything turned to worms, we learned that our problems were the fault of everyone else—of the global economy. I hope that everyone has noted how the word "global" has been used on every conceivable occasion. That was designed deliberately as a tactic—one that would have been worthy of the good German doctor—to impress upon our people that this was all someone else's responsibility, and that responsibility did not lie here. Then the hapless Sir Fred Goodwin and his pension were invoked to distract the public's attention from the architect of this disaster. As interest in him wanes, the laissez-faire market economy has been identified as a villain requiring a form of regulation, which I understand the Government described last night in chilling terms, saying that the banks
	"should be very frightened of the FSA".
	They clearly have not been, up to now.
	The first issue that I want to address is the banks. I used to be an international banker, ending up with Standard Chartered bank. I believe that the banks must accept a large share of the responsibility, because they were responsible for making the decisions on to whom to lend money and on how to devise the various mechanisms to lubricate the economy. There is no doubt in my mind that the explosion in the number of complex products developed an inverted pyramid, and my right hon. Friend the Member for Wokingham (Mr. Redwood) was absolutely right to point out that capital ratios have simply soared.
	Securitisation and derivatives might not, in themselves, have created this crisis, but there is now a growing admission that those on the boards of the banks had little idea of where the real risk lay, and that the banks lacked the appropriate internal procedures and checks. A former chairman of RBS, Sir Tom McKillop, admitted as much yesterday. When asked whether he was sure that he could understand the full complexities of the sophisticated loans that his bankers had created, he replied:
	"You said 'full complexities'. I would say no."
	In other words, the man at the top of the bank did not understand what was being done in the name of the bank. What an indictment on those bankers, that they should have brought the profession to such a humiliating pass.
	There is also the matter of poor lending. It is entirely right that people have referred to what has happened in the United States. An interesting article appeared in  The New York Times on 30 September 1999, in which it was pointed out:
	"Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people".
	That is, people who were a notch below being creditworthy. There was political pressure to lend, and that was being mirrored at home by the Prime Minister, who wanted to increase social inclusion so that those who were a notch below creditworthiness could also be lent to. In that perceptive article, which I commend to my hon. Friends, it says:
	"In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn".
	How perspicacious that was.
	The second issue I want to address is regulation. As my right hon. and learned Friend the Member for Folkestone and Hythe (Mr. Howard) pointed out, the Bank of England had been responsible for banking supervision for centuries; it understood the system and the system understood it. The "Old Lady" understood. I recall when I was with Bank of America Ltd in the 1970s, my boss was called in; I asked "How did it go, Bob?" and he said, "Fine, no problems". We asked whether the Bank of England had anything to suggest, and he said, "Well, it thought our Polish book was a bit longer than we might like". That meant that, on the following day, our exposure to Poland was reduced—no diktat, no law: it was done because the Bank of England knew what it was on about and its advice was accepted.
	My right hon. and learned Friend the Member for Folkestone and Hythe also drew attention to the fact that we have warned consistently of the danger of transferring responsibility for banking supervision from the Bank of England to the Financial Services Authority. Interestingly, in the debate on the Financial Services and Markets Bill on 28 June 1999, the then Chief Secretary to the Treasury, the right hon. Member for Darlington (Mr. Milburn), claimed somewhat extravagantly:
	"The Bill gives the FSA the statutory basis and powers that it needs to be the world's leading regulator of financial services. In so doing, it establishes a modern regulatory framework that will stand the test of time and apply into the next century."—[ Official Report, 28 June 1999; Vol. 334, c. 36.]
	How are the mighty fallen. The regulatory regime established by the Prime Minister has been an abject failure, and he must accept responsibility for it.
	As anyone who has ever tried to open a bank account knows, the FSA concentrates on erecting hurdles to stop money laundering rather than on monitoring the quality of the lending by the main banks. The independent financial advisers gets the third degree and Goodwin gets the K. That is the way the FSA and its progenitor, the Prime Minister, worked. Now the Government are threatening to impose a draconian regulatory regime. What is wanted is not more regulation, but more effective regulation, which has been lacking.
	Thirdly, I want to raise the issue of the Prime Minister himself. I hope to make it clear to the House that I believe he is the architect and the man responsible. One of the most unattractive—indeed, offensive—sights has been how openly the Prime Minister appears to have been revelling in this crisis. He was down and out in October 2007; all of a sudden, a crisis came along and he blossomed. As I have explained, the banks have played their part, but the Prime Minister, the most overrated Chancellor in my lifetime, bears a heavy burden. He destroyed the pensions industry; he destroyed the tried and tested system of banking supervision; he failed to rein in irresponsible lending; he promoted imprudent lending by pressing banks and other financial institutions to lend to those he described as "the socially excluded"; he sold off 60 per cent. of the UK's gold reserves at $275 an ounce—close to a 20-year low, and, I remind the House, a fraction of today's price of $900. The Prime Minister imposed a growing tax burden on the people of Britain which, according to the OECD, has risen from 39.3 per cent. of GDP when he took office to 42.4 per cent. in 2006, and rising. He also permitted a 13 per cent. increase in public sector employment when private sector employment grew by only 5.7 per cent. All that has happened under the Prime Minister's watch and he must be made to accept responsibility.
	The Chancellor said last year:
	"The Government do not want to run Britain's banks—we want to rebuild them."—[ Official Report, 13 October 2008; Vol. 480, c. 541.]
	How can that be reconciled with the bullying of Barclay's bank to join the scheme, presumably in exchange for its shares? I received an interesting note from a former colleague at Standard Chartered bank, who wrote to me today:
	"I am astounded how lazy the response has been to the extent of the RBS and Lloyds reliance on the Asset Protection Scheme. Over half their risk-weighted assets are covered. The cost to Lloyds shareholders has been enormous as by far the majority of the assets covered in the scheme are from HBOS, and the 'price' of insurance has increased the state holding to 70 per cent. Daniels and Bland should be given the Byng treatment and Government 'congratulated' for passing the cost of bailing out HBOS onto Lloyds shareholders—state sponsored grand larceny!"
	I could not have put it better myself.
	The test for the Government will be how quickly they can restore the banks to private ownership. As the hon. Member for Twickenham (Dr. Cable) said, they will need direction on whether to increase lending or to reinforce their capital ratios first; they cannot have it both ways. Secondly, the Chancellor must demonstrate how he will reduce the taxpayer's liability.
	This is not a failure of capitalism; nor is it an indictment of Thatcherism. She was all for sound money. The public have become completely bewildered by the turn of events and the amounts of money involved. At a time when finance is so tight that the Ministry of Defence has to scrape together every penny to fund the armed forces who have never let this country down, the banks have had literally billions of pounds thrown at them. Now the Government have even adopted Mr. Mugabe's policy of printing money, a policy that has destroyed Zimbabwe and will come back to hit us.
	I believe that the message we must take away from all this disaster is that the country has become far too reliant on the financial services for wealth creation. We must create a much more broadly based economy, and we must reinvent engineering and manufacturing as well. I hope that the House will recognise that the one man who bears responsibility for this is the Prime Minister, and he should go.

Colin Burgon: I agree with the final comments of the hon. Member for Aldershot (Mr. Howarth)— [Interruption.] I refer to his comments on the need to rebuild Britain's manufacturing base. I had better clarify that, because I am after a job in the future.
	I want to avoid what I consider to be pretty senseless tit for tat. I want to avoid aiming for the easy target presented by the individual bankers who have caused outrage in society. I want to deal with some of the fundamental questions. I think that we should be discussing and arguing about those, and hopefully the public will be listening.
	It is my contention—here I pick up a point made by my right hon. Friend the Member for Oldham, West and Royton (Mr. Meacher)—that the past 30 years have been dominated by a neo-liberal consensus that has unfortunately been accepted by new Labour and, much to our detriment, willingly embraced by the Conservatives. I am not so sure about the Liberal Democrats.
	Let me define neo-liberalism. The theory is that the market should determine individual actions, that we should support privatisation and deregulation and trade and financial liberalisation, that we should shrink the roles of the state and of trade unions because they interfere with the workings of the market, and that, on an international level, the International Monetary Fund and the World Bank should carry out the structural adjustment programmes that introduce such ideas into the societies of developing countries.
	How do these incredibly sophisticated ideas work out in our everyday lives? I think it is tremendously important that, at an individual level, we are defined as consumers rather than citizens. The high priest of neo-liberalism, Ronald Reagan, said when he was elected that government is the problem, not the solution. Those involved in the neo-liberal revolution of the mid-to-late 1970s promised that an economic panacea could be delivered that would mean growing wealth for everyone, but that was far from the case. Neo-liberalism has not delivered gains of that kind for people; in fact, I would argue that throughout the world it has delivered growing insecurity.
	Over the past three decades there has been a widening of inequality between rich and poor nations, and—just as important from our point of view—a growing inequality within the populations of the advanced economies. Another less well-known fact is that those three decades of neo-liberalism have led to no improvement in the living standards of large sections of humanity, and in many areas incomes have fallen.
	As for the international dimension,  Real World Economic Outlook, which was published by the New Economics Foundation in 2003 and used the IMF's own figures in assessing the world economy, described what had really happened over the past three decades. World GDP per head was static between 1980 and 2002. In some crucial years—at roughly the time of the collapse of the Soviet Union, between 1988 and 2002—world GDP per head actually fell. Between 1980 and 2002, real average GDP per head in the countries outside the IMF's group of so-called advanced countries, comprising four fifths of the world's population, fell from $1,400 to $1,100 per year.
	What has been the impact in the home of neo-liberalism, the United States? The figures for median earnings of working males in the United States are interesting. The median earnings in 2005 were slightly less than in 1980.  The New York Times has been mentioned, and its report of 29 March 2007 is also interesting:
	"The top 1 per cent."
	of the US population
	"received 21.8 per cent. of all reported income in 2005...more than doubling their share of income in 1980."
	That approaches levels of wealth distribution last seen in the 1920s. Warren Buffett, one of the richest men in the world, stated in 2006:
	"There's class warfare, all right, but it's my class, the rich class, that's making war, and we're winning."
	He was absolutely correct.
	What has been the impact of these neo-liberal ideas over the past three generations? What have they done to our society in Britain? A recent article in  The Guardian dealing with inequality in Britain makes worrying reading. Using 1974 as a baseline, it said that inequality had increased by 40 per cent. by 2006.  The Guardian explains that the increase
	"was the sharpest in the developed world",
	and suggested it was partly the result of the political architecture that we labour under.
	Child poverty figures are particularly important, as they show how the economic system works out for the most vulnerable. We now have 3.9 million children living in poverty in the UK, after housing costs are taken into account. The UK has one of the worst rates of child poverty in the industrialised world. This is the result of three decades of this economic system working through. I could go on and highlight the figure for child poverty in the east end of Glasgow, which is, I think, about 98 per cent., or even state that four out of 10 kids in London are brought up in poverty, even though the richest square mile of the country is located in the city.

David Taylor: Will my hon. Friend give way?

Colin Burgon: No, I will crack on, if my hon. Friend does not mind.
	The roots of the current crisis lie in the 1980s and 1990s, but their effect is only now hitting home. We all remember, from reading learned newspapers, smart talk of "post-Fordism", of how we were moving into a post-industrial age, and how the provision of services was the way forward and the production of things something from the past. We were told that Britain was in a uniquely strong position in this new economic order because of the history, experience and international reputation of the City of London, and that the City, and all that it brought with it, would be the golden goose for the economy. This is clearly not true.
	Like the industrial revolution, the financial revolution has affected us in every corner of our lives. Let us take our attitude to housing. A home is now a speculative investment, a source of access to greater credit or a piece of equity that can be realised at some point. Housing has become a national obsession, and that has severely distorted the economy. I saw some figures suggesting that, at its peak, the buy-to-let revolution "contributed"—I use inverted commas—four times more to the UK economy than the motor industry. To pick up on the comments of the hon. Member for Aldershot, I believe our economy is dangerously unbalanced and needs adjusting.
	What situation are we in today? Is this merely a re-run of the 1980s? I would argue that it is a re-run of the 1930s. There is evidence of a 1930s-style downturn. The current decline in financial markets has continued for 17 months to match the rate of decline after 1929, which is the most severe recorded. The decline has not yet carried on for as long, but it is following the same path.
	I was going to look at the effects on the real economy. The latest figures released by the Organisation for Economic Co-operation and Development for world trade up to December 2008 stand out. They suggest that the economic downturn is set to be the worst since 1929. We have heard from my right hon. Friend the Member for Oldham, West and Royton about the huge sums of money that have been put into the banking system. It is now clear that the banks should be nationalised, and they should be driven in their investment policies by social need, not the need for profit. I was also clear—I warned the Chancellor about this some time ago; not that he listens to me—that the bankers would take the money and put two fingers up at us. That is precisely what has happened. I am glad that the Treasury Committee Chairman has effectively called for the nationalisation of the banks.
	In conclusion, this is a political crisis. I started off by discussing Ronald Reagan, and I shall now draw on something that Roosevelt said in 1931:
	"What is the State? It is the duly constituted representative of an organized society of human beings, created by them for their mutual protection and well-being. 'The state' or 'The Government' is but the machinery through which such mutual aid and protection are achieved."
	I hope that new Labour can inject some of that into its backbone.

Oliver Heald: Consumer confidence is one of the most important aspects of this recession and where it is going. I agree with the hon. Member for Elmet (Colin Burgon) that when we look at the problems of the 1930s and what President Roosevelt did, we find that consumer confidence was right at the heart of what he was trying to achieve with the new deal. The aim was to rebuild consumer confidence after the crash, and he largely succeeded, although I should say that a lot of the myths about the new deal are wrong, as my right hon. Friend the Member for Haltemprice and Howden (David Davis) made clear. The Americans did not have many shovel-ready schemes—to use the jargon of the time—which meant that they were not able to put as many people to work as quickly on those great schemes as they had hoped; in fact, it was five years before the main schemes were working.
	The key effect of the new deal and the way in which President Roosevelt announced it and pressed it forward was to build consumer confidence; people felt that there was a plan and a way forward—a definite approach. That certainty of approach led to the rebuilding of confidence; companies started to take on labour, and projects that were nothing to do with the Government started to be undertaken and commerce started to revive. The steady hand on the tiller was as important as those new deal schemes.
	What worries me about the current situation—the hon. Member for Newcastle upon Tyne, North (Mr. Henderson) made this point—is that it has not been clear to many people exactly where we are with this recession, as it gradually seems to get worse with every piece of news that we get. I was talking to some American officials at the embassy last week, and they were describing their shock at the fourth quarter unemployment figures in America. They said that to lose 651,000 jobs in one month was shocking; in fact, President Obama called the set of figures "astounding". Standard & Poor's had been expecting a relatively modest recession in terms of the number of job losses, and its chief economist, David Wyss, said:
	"Up until the third quarter, we thought we were on track for a relatively moderate recession, but then in the fourth quarter, everything fell apart".
	That makes the point quite well.
	This country is in danger of underestimating what we are dealing with. Yesterday, I was surprised to read in the  Evening Standard that the Secretary of State for Work and Pensions was saying proudly that unemployment was rising more slowly than in the previous recession; it was as if he could be sure about that. Yet, today we were given the worst figures ever for a rise in unemployment—the 0.5 per cent. increase was higher than the previous record, in March 1991.
	The Government need to bear in mind the effect that unemployment has on consumer confidence. Someone who has just lost their job, whose home is on the line and who is worried about a repossession is not going to go out and spend money. My goodness, such a person would be careful; they would try to repay debt and so on. The Government are working against a moving picture—every month's delay at the moment means another 70,000 people unemployed and looking for work. It is an urgent problem that needs tackling, but the Government's schemes for jobs and homes seem to take for ever to put in place. Sometimes we just have to act. The Conservatives have been saying for months that you—I am sorry, I mean the Government. I am getting over-excited—

Angela Eagle: Calm down!

Oliver Heald: Well, I am actually very worried about what is happening to unemployment and the economy. We need a sense of urgency, and to get a good quality scheme on loan guarantees in place soon.

Edward Timpson: My hon. Friend is making a passionate speech on behalf of his constituents and of everyone who thinks that the situation is getting worse and that we need to see some action. Does he agree that one of the problems with the overload of initiatives that we have seen the Government announce in an attempt to tackle the recession is that rather than do the planning before making the announcement, they have done it afterwards? That is why we have seen such a delay once the initiatives have been announced and before the people who need the help have been able to get it.

Oliver Heald: I could not agree more. It is classic new Labour spin: they say "Let us make an announcement and get it in the media," and of course it is half-baked and not ready to go. That saps confidence and people do not believe that there is a steady hand at the tiller. We saw with Northern Rock all the dithering and not knowing what to do, and how damaging it was for public and consumer confidence. All these schemes are announced, but they do not come in on time. They are not even being advertised properly to the high street banks, as we have heard, and that is just not good enough.
	We will pay a huge price. People remember previous levels of unemployment, and Labour Members have had much to say about that. Indeed, the Prime Minister spoke in his maiden speech of mass unemployment as
	"the grossest affront to human dignity".—[ Official Report, 27 July 1983; Vol. 46, c. 1240.]
	For years he has spoken about unemployment, but it is time that he got real about what we are facing. He is likely to leave office as this country has the highest level of unemployment in its history. The record so far is 3.1 million, and he is likely to exceed that. He is already following the old-fashioned Labour Government route: they always leave a higher level of unemployment when they leave office than when they came in.

Angela Eagle: Will the hon. Gentleman admit that although today's figures are extremely difficult and worrying, there are still more jobs in the economy and more people in work now than when we came into office in 1997?

Oliver Heald: The hon. Lady knows that most of the 2 million extra jobs did not go to people who were here and looking for work when her party came into office. In fact, the number of unemployed fell by 300,000, but the number of jobs rose by close to 2 million. That is another issue.
	Unemployment is a scourge for young people. To have young people, with their hopes for the future, unable to find work and even facing the prospect of long-term unemployment, is such a worry. It is important that the Government get the loan guarantee scheme in place and gear up for the unemployment challenge ahead. Just reversing the cuts in the Department for Work and Pensions—keeping the current number of offices open and increasing staff numbers—will come nowhere near meeting the challenge. More funding will also be needed for the flexible new deal if it is to go ahead in its current form, as the Select Committee on Work and Pensions has said.
	It is time to wake up, smell the coffee and realise that the country feels a deep sense of insecurity. Urgent action is needed, and it is no good just going along with a civil-service type approach, examining everything very carefully and circulating documents round the Cabinet and junior Ministers. Sometimes it is necessary to stop dithering and get a grip—the time to do so is now.

Nick Ainger: I was surprised by the comments of the hon. Member for North-East Hertfordshire (Mr. Heald). The opening speech made by his Front-Bench spokesman made no proposals other than the perpetually fed-out idea of a £50 billion loan guarantee system. There was nothing else. Where was the beef? This was an opportunity for the Opposition to set out what they would do if they were in government, and they have come up with one scheme that my hon. Friend the Member for Coventry, North-West (Mr. Robinson) was able to start picking holes in during the debate.
	Thirty-two years ago this week, on 19 March, my daughter was born. On 20 March, I was made redundant. Understandably, that had an enormous impact on me. In my political life, I have always argued that everything and anything should be done to avoid unemployment and to keep as many people in work as possible. I would never want what my family went through—thankfully for a relatively short period—to happen to any other family if it was avoidable.
	Although my hon. Friend the Member for Newcastle upon Tyne, North (Mr. Henderson) said that he thought that the Back-Bench speeches had been good, I was disappointed because one thing seemed to be missing from the Tory Back-Bench speeches—we have not heard anything from Lib Dem Back Benchers, because they are not here—and that was a plan of action. We simply heard the claim that the £50 billion loan guarantee scheme would suddenly release funds into the economy and everything would be hunky-dory. It is quite clear that although lending is enormously important, we have a global recession and the real economy is starting to be hammered, too. That shows that the solution is not just about providing greater lending in the economy. I want to say a few words about how we got here.
	I am a member of the Treasury Committee and we have taken hours of evidence—first on Northern Rock and now on our latest inquiry into the banking crisis. One thing that has come out is that although serious mistakes and errors have been made by the FSA—Lord Adair Turner is certainly tackling those issues in his report, which was published today—blaming a politician or the FSA is rather like a serial burglar claiming when he comes before the magistrate that he robbed so many houses because the police were ineffective. The problem is that for possibly two decades—and certainly in the last decade—a "get rich quick" culture has developed in the financial services industry and the banking industry, where early profit was rewarded and no one minded about the longer-term issues.
	That situation was highlighted for me by some of the evidence that we received from academics and those who work in the financial services sector—commentators as well as practitioners. One example concerned the complexity of the derivatives that have been developed in the past two decades and the complete failure of senior managers to understand the risks involved. The classic example of how we got into this mess involves Lord Aldington, the UK chairman of Deutsche Bank. His bank had to write of billions of dollars worth of dodgy derivatives—collateralised debt obligations—the week before he gave evidence to the Committee. The Chairman asked him to explain what a CDO squared was, but Lord Aldington said that he did not deal in that sort of detail.
	However, it is not just the banks' boards or senior management who are responsible, because shareholders too have not been active enough in asking the necessary questions. To be fair, some financial institutions such as Legal and General were trying to persuade the RBS board in early 2008 to sack Fred Goodwin and Tom McKillip as the bank's chief executive and chairman. They felt that the bank was following a model that was far too risky, and they were proven absolutely right.

Peter Bone: I am listening to the hon. Gentleman with great interest. He is saying that the problems with RBS lie in part with the regulator and in part with the bank's board of directors and shareholders, but does he not think that the Government should also share some of the blame?

Nick Ainger: I listened with interest to what Opposition Members said about how removing the regulatory role from the Bank of England has led to the present difficulties, but the same situation exists in the US, Japan and across Europe. Yes, there have been serious failures of regulation, and I accept that the FSA and other regulators got into a tick-box culture that meant that they were not looking at the big picture.
	The classic case that should have sounded the warnings was Northern Rock. That involved another tick-box culture where everything, according to the regulator, was in order, yet its business model was totally dependent on the wholesale credit market. As soon as that dried up, Northern Rock's business plan collapsed, after which the bank went belly up and had to be rescued.
	The problem was that the regulators were not looking at the other banks either. The revelations about HBOS, for example, clearly show that it was getting into virtually the same position as Northern Rock. In addition, we now know that RBS was massively leveraged and that the ABN Amro takeover was a disaster that created real instability in that institution. Yet because the FSA was merely ticking boxes and not looking at the bigger picture, it missed the real problems that the banks were heading for.
	I want to say something briefly about the role that the banks are playing on what might be called the front line, where small businesses are having real problems accessing some of the loans schemes. The Treasury Committee took evidence in Leeds, in a session that highlighted that particular difficulty. We were told that a very successful company in Humberside needed an extension of its overdraft, but that its bank was being extremely difficult and unco-operative. It turned out that the local regional manager of the bank involved was the fifth to hold the post in the past two years. He did not know really anything about the region or its particular companies, and I believe that the banks' loss of direct contact with businesses, and of the knowledge and understanding of what they do, is causing real problems.
	I urge the Government to get to grips with the banks. They must do so at the macro-level—the aim is to get the money out as quickly as possible—but they must also look at how the banks are operating at the micro-level, because that is where many of the problems lie.
	I should like to mention an issue in which I am particularly interested, although since the collapse of Lehman Brothers and the real onset of the global recession, it has gone out of the headlines. It is the huge commodity spike that took place in late 2007, which peaked when the oil price reached nearly $150 a barrel in July 2008. My concern is that when we come out of the recession, there will be another commodity bubble, which will prevent or delay recovery. The Government, through the G20, should look for a way to ensure that commodity markets are far better regulated.
	Finally, the G20 is a real opportunity for us to ensure that there is quality regulation throughout the world; to be seen to be acting together to address the problems, particularly in the developed world; and to look at how we can co-ordinate fiscal stimulus. At the end of the day, manufacturers here and in, say, Germany are dependent on both countries' economies to create demand for products, whether those products—cars or whatever—be German or British. Co-ordination is a key to that. I am sure that the Government will do what they can to ensure that the G20 is a success, both on the regulatory front and when it comes to addressing the overall problem in the economies of the world.

Stephen O'Brien: I ask the House to note my entry in the Register of Members' Interests.
	I want to congratulate my hon. Friend the Member for Tatton (Mr. Osborne) on a really impressive opening speech on an important motion. Although we are talking about a very complicated area of policy and politics, he expressed how people feel today. He set out how they view the Government's activity, and how they rate its effectiveness—or, more precisely, its ineffectiveness.
	I had not intended to make this point, but I want to mention the Chief Secretary to the Treasury's somewhat smug reply to my hon. Friend's speech, in which she referred to the early '90s. I do not know where she was in the early '90s, but I was there; I know what unemployment looks like, and I know what redundancy looks like. Moreover, I know that it does not help the people who are in the thick of it—in the construction and building materials industry—when those who were not there think that they can preach to others. Those of us who have been through a recession know what is absolutely essential: confidence, stability, the cost of capital and, above all, having capital available. Whether a business person is on the shop floor, out there making the roads or even in the boardroom, what makes the difference when they take their risks and make their decisions is knowing that those things are in place.
	T he Government of the day were certainly not blameless, and I was critical at the time, but they recognised the issues and helped us to restore and retain jobs. The Chief Secretary to the Treasury—this is why I make the point—could not have sounded more shrill and insulting to the stalwart people who soldiered through that time. I hope that she will reflect seriously on the fact that her comments do not play well with the people whom she claims to represent as a Minister of the Government. One need only look at the current number of housing starts, which are at 5,000 a month. In the very worst of previous recessions, they were about double that, at 10,000 a month.
	Given today's unemployment figures, we need to recognise that this recession puts other recessions into the also-ran department. The rate of the rise in one month is sufficient to make most people afraid; it is eye-watering compared with the rates in previous recessions. Let us not for a moment try to pretend, as the Government have done today, that the recession is not deadly serious, and that many people in our country are not frightened. Frankly, they are right to be afraid.
	We may say the usual knockabout stuff about an apology-free Prime Minister, the "Blame anyone but me" attitude, and the fact that we are now in the Brown bust, despite the Prime Minister's claim that he would get rid of boom and bust. Many right hon. and hon. Members sought to include those points in their speeches, but let us not forget that in recessions the victims are people—our constituents. The remedy is to back business, and for people to get back to work in those businesses. I know that this sometimes pains the Government and many Labour Members, but whether they like it or not, when we talk about business, from the shop floor to the boardroom, we are talking about the private sector.
	Yet again, as in all recessions, it is the private sector that takes a disproportionate share of the pain. Those in the private sector are ultimately the wealth creators, the risk takers, the entrepreneurs and the investors. Now that I am in the public sector, I understand why I was so angry with it when I was in the private sector. It seemed to think that a recession was something that happened to other people, not those in the public sector. In a recession, the national interest is damaged and deeply affected for everybody, but we all depend on the private sector for growth, wealth creation and ultimately the tax revenues that fund all our choices and democratic opportunities, and we must back it.
	I received an e-mail from Robert Jenrick, who relates a story about Newcastle-under-Lyme, where another good business has fallen victim to the economic crisis—a local engineering firm for over 40 years, and exactly the kind of respected employer of skilled workers that we must ensure survives the recession. Its parent company is Wrekin Construction, a profitable business which recently built Keele university's science park. The business collapsed after Royal Bank of Scotland, now majority owned by all of us as taxpayers through the Government, demanded repayment of its entire overdraft. A similar thing happened as a result of a demand from Midland bank in the north-west back in 1979. I should know; it had a big effect on my family. More than 500 jobs may now be lost as a result of the engineering firm's collapse. That could be unnecessary, provided the banks start lending again.
	Among all the issues bearing down on this country now are the initial crisis, the banks' inability to continue lending, and the fact that they had to hunker down and recognise that they had made some serious misjudgments. They had got out of control, they had lost what it was truly to be a banker and had become financial speculators and product innovators while most of those who had supervisory responsibility did not know what those products did.
	It is vital that we all club together to help in political terms and get the banks lending again. Without lending, we cannot fuel, preferably from the bottom up—from the SMEs up—the necessary business activity. We cannot support bankers who have decided to take public money to support themselves. We are right to be angry and to challenge the intention of those banks to continue to pay bonuses. They say they are contractually bound, but I would have said of those who might have been expecting a bonus, "Let them sue for it." It may have been interesting to see how many of the arguments they advanced to get their entitlement, as they see it, would cut any ice. We must maintain that supply of fuel to business, and at present it is not getting through.
	The key to success, as we know, is confidence. We start from a poor base. The uncertainties, particularly in relation to corporate tax, mean that most businesses have not been investing in their future, in innovation, in competitiveness and in ensuring that they can capture and retain markets, as they would have done had normal investment taken place in the so-called good times.

David Taylor: Will the hon. Gentleman give way?

Stephen O'Brien: I will not, as we are all constrained by the time limit.
	It is important to recognise that we start from a low base of business investment. Even in these tough times, businesses have to think about where, if they can get capital, they place that capital to ensure that they are best positioned for recovery, so that they do not find themselves disadvantaged by the recession, which has largely had nothing to do with their good business activities and everything to do with another part of the economy. In addition to all that others have said, I suggest that there is an opportunity for the Government to—let us call it this—steal our policies, including the £50 billion national loan guarantee scheme. Despite the various attempts by various Whips and others to rubbish that, nothing has been proved against it.
	We have also proposed a tax break for new jobs, making sure that we reduce employment costs for small businesses by cutting national insurance, and helping small business with their cash flow by delaying VAT bills for six months. Through the Department for Business, Enterprise and Regulatory Reform we need to tackle the credit insurance calamity, which is causing major problems of supply. The Government are not prepared to acknowledge that and Lord Mandelson is apparently unwilling to meet leading retailers to discuss it.
	Another point, which I hope I will be able to discuss later with my right hon. and hon. Friends on the Front Bench, is that we should look seriously to the past when the Industrial and Commercial Finance Corporation, which was succeeded by 3i, was an extremely good way of trying to get a balance between equity and debt risk into new and start-up companies and early development companies. That was a success story, and I do not think that the conditions today are dramatically different, so we should look to those lessons. But perhaps, rather than being owned by the Bank of England and the clearers, such an entity might be very interesting to the venture capital trusts that are looking for opportunities to get their money to work.
	I have to report an insidious and worrying effect of the Government's increasing involvement in the everyday aspects of our lives. As some may have read in the press, my constituent, Geoff Robbins, who has a thoroughly sound business, rang up his bank, RBS, for a normal merchant account, and after the usual questions, the final one was whether he had any political or judicial affiliations. Can you believe it? A well-known journalist tested that and received exactly the same reply and the bank was embarrassed and had to backtrack. That is a sign of the times. When banks start to become state-owned, people begin to worry that unless they are something to do with Labour they will be disadvantaged. That is a deeply worrying development in our national life. One has only to pose the question in the future: Labour or Conservative, which is safer? The answer is Conservative.

Sally Keeble: I am sorry that I was not here for the opening speech, but we had a homecoming parade in Northampton, and I congratulate both the Royal Lancers on their wonderful parade and the people of Northampton on turning out in record numbers in brilliant sunshine, showing the enormous support in the town and the country—and in the county. I see one of my county Members of Parliament.

Peter Bone: I was delighted that my wife was able to go along and represent the constituency.

Sally Keeble: The parade showed the huge support in the county and throughout the country for our armed forces. It was a fabulous event.
	This afternoon I have listened to pearls of wisdom from Members about what they advised or would have done over the years. I have also had the privilege to sit on the Treasury Committee for the past four years and have heard the evidence of all those involved in the banking crisis. It has been clear throughout that nobody predicted it, gave the warnings or said what action they could have taken at the time that would have prevented it. However much hon. Members might say that they gave warnings at the time, it is clear to those of us who sat through the evidence that people did not recognise the size and scale of the problems until it was very late indeed. The first person to give the public warning about the scale of what was happening was my right hon. Friend the Chancellor, who did so last summer.
	The real issue is whether the Government are taking the right approach to the crisis and whether the Conservatives have policies that would make the situation any better. I am clear that, although the Government's policies are risky, difficult and not perfect, they are the most likely to support people during the crisis. I also draw on my experience of previous recessions, which was not as a Member of Parliament making speeches in this place, but outside reporting on them and dealing with the consequences.
	For example, in the 1980s recession, I saw the consequences of a Government who did not invest enough in the Department for Health and Social Security, and in particular in social security offices. In Birmingham, when unemployment rose, the offices were overloaded and they shut down. For nine to 10 months people simply did not get any benefits. That is why the Government are right to invest in the Jobcentre Plus offices and to think carefully about how they will support people who need advice and retraining, and, yes, benefits.
	During that recession, the Conservative Government were also not prepared to invest in training. As a result, one of the most talented work forces in the world—the car workers of Birmingham—found themselves unemployed with no opportunities to retrain. That is why I particularly applaud the investment that this Labour Government have made in apprenticeships, schools and universities.
	During the recession of the '90s, my hon. Friend the Exchequer Secretary and I were both in south London and saw its consequences. The then Government, who had no commitment to tackling inequality, allowed people in London to work on £1.20 an hour when people in Canary Wharf and the City were still making vast amounts of money.
	The right hon. Member for Wokingham (Mr. Redwood) was right: what the Government have done is risky. However, it is absolutely right to intervene—and with real force. Last autumn, the recapitalisation was needed to prevent a major bank from collapsing. The asset protection scheme frees up the banks' balance books to enable them to start lending. There is also the quantitative easing; it would, I suspect, have been extraordinarily difficult for the Bank of England to manage both the quantitative easing and banking supervision. The division of responsibility at the Bank was right, although the FSA has clearly had difficulties.
	Furthermore, it was right for there to be a fiscal stimulus. It would have been wrong if the stimulus had gone into public sector infrastructure spending at that stage, because that is notoriously slow. I would have preferred the stimulus to have gone through tax credits rather than VAT. It would then have been more targeted at the people who needed it more, and some of the retailers would not have been able to massage the figures.
	As we prepare for the upturn, the focus on science, technology, engineering and maths will help rebuild the economy for the future. Young people will get education in the subjects necessary if they are to follow the direction in which the economy needs to go in the future.
	In the short time that remains, I have a wish-list to give to the Exchequer Secretary. Some of the items will even find favour with the Conservative party. First, the Government should make sure that when something is announced, it is available. Some of the measures put in place are available, so this is not a criticism of all the Government's schemes. However, there have been real difficulties, particularly with the mortgage rescue scheme. That scheme was announced and people thought that it would be available, but it has taken a couple of months to put in place. Most people—certainly my constituents—are realistic about what happens. They make plans on the basis of what is on offer. If they think that something is on offer, they will plan around it. If, however, they then find that it is not, they get very cross.
	On the home ownership front, can the support for mortgage interest be extended so that it is made available to some extent to people on contributions-based jobseeker's allowance—perhaps through a link to the tax credit system? In my constituency, there are one and a half incomes per household, so if one person loses their job the income is still too large to qualify for support for mortgage interest. People might lose their homes, so I ask my hon. Friend the Exchequer Secretary to look at that issue.
	In particular, will the Government put pressure on the banks regarding the conditions imposed on recapitalisation? The banks should maintain their 2007 levels of lending, and we should get monthly rather than just annual reports. The banks are obliged to provide that level of lending and there is clear evidence that the money is not getting through. The Northamptonshire chamber of commerce kindly organised a business advice surgery for me at which businesses raised issues, and that was the No. 1 problem.
	One of the other problems was that, because of very low interest rates, banks were recouping some of the money that they would otherwise have got by increasing arrangement fees and other hidden charges. I hope that the Government will put real pressure on the banks so that they cannot use other means to make life difficult for small and medium-sized enterprises. If banks are reviewing their loan books, which they obviously have to do, they should not be punitive or trigger problems for fairly sound firms, which are finding their way through current difficulties, by stopping draw-downs on existing loans, for example, which is what HBOS did to one of my constituents, threatening 50 jobs.
	I hope that the Government will implement quickly the recommendations of the Turner report. The Government called for it, and it is important to recognise that. In particular, I hope that we will implement the recommendations on credit ratings agencies and on remuneration policies. While there has been much focus on Fred the Shred's pension, we have not heard so much about the fact that bonuses encourage inappropriate risk-taking, which needs to be dealt with.
	Finally, please will the Government maintain their outstanding commitment to tackle child poverty and global poverty? In these hard times, it is important that our party and our Government hold fast in the great crusade that has won them credit not just in this country, but around the world. It has been one of the defining policies of this Labour Government.

Brooks Newmark: The Prime Minister has indeed taken Britain from boom to bust. As we heard from my hon. Friend the Member for Tatton (Mr. Osborne), today the IMF predicted that the global economy will shrink by 0.6 per cent. in 2009, compared with a figure of 3.8 per cent. in the UK. By contrast, the United States economy—I know that the Prime Minister likes to contrast us with the US—will contract by 2.6 per cent. Next year, however, while the rest of the world returns to growth, the UK will continue to shrink. As the economy shrinks, so do tax revenues, and tax revenues from the City alone are expected to drop by up to 40 per cent., with a loss of up to £25 billion.
	Unsurprisingly, sterling has collapsed to a 23-year low of $1.35 from a peak of $2.11 under a year ago. Let me remind the Prime Minister that it was he who said, in 1992, that a weak currency arises from a weak economy, which in turn is the result of a weak Government. The problem began the day that the Prime Minister stepped into No. 11 Downing street. In making the Bank of England independent, removing debt management to the Treasury and removing day-to-day supervision of the commercial banks, he left the Bank, as my right hon. Friend the Member for Wokingham (Mr. Redwood) pointed out, blind in one eye as to what the Government broker was up to, and blind in the other as to what was going on with the clearing banks.
	It was the Prime Minister who set up the tripartite system of regulation between the Treasury, the Bank and the FSA, with no one ultimately taking responsibility when the economy began to unravel with the collapse of Northern Rock. Indeed, in his Mansion house speech of 16 June 2004, he said:
	"I want us to do even more to encourage...risk takers."
	On that policy, he was certainly successful. As we heard, he sold gold at the bottom of the market, at an average price of $275 per ounce, when its price subsequently rose to almost $1,000 an ounce, costing the public purse £5 billion. He also abolished tax benefits that pension funds had gained from advance corporation tax, costing pensioners £5 billion a year and diminishing the value of personal savings by more than £100 billion. His tax credits system is in tatters, with more than two thirds of recipients receiving the wrong amount at one point. There have been £5.8 billion of overpayments, with £500 million written off so far and another £1.5 billion unlikely to be recovered.
	In the meantime, debt ballooned. While the Prime Minister sought to maintain his golden rule of keeping net debt at about 40 per cent. of GDP, he put more and more debt off balance sheet so that by the time I wrote my pamphlet "The Price of Irresponsibility" for the Centre for Policy Studies last October he was hiding £2 off balance sheet for every £1 that he was keeping on balance sheet. Not surprisingly, he become known as the Enron Chancellor.
	Today, the situation is even worse. If public sector pension liabilities and private finance initiative schemes are added to the on-balance sheet debt of recently nationalised banks, total debt today is not the £700 billion that the Government acknowledge but as my right hon. Friend the Member for Wokingham indicated, a whopping £4.6 trillion. In other words, it is not 40 per cent. of GDP or even 48 per cent., as the figure of £700 billion implies, but almost 300 per cent. That is about £200,000 for every household in the country.
	According to some estimates, it will take us until 2030 to bring the debt to GDP ratio back to 40 per cent. That is the Prime Minister's legacy to our children and our children's children. Yet in October 2008 he said:
	"I have to say to you that we face this situation as a country with relatively low national debt".
	If that is the case, why is UK Government debt considered riskier than that of McDonald's?
	What is the Government's solution? The VAT cut cost £12 billion, and in the words of President Sarkozy it has "absolutely not worked". The Monetary Policy Committee has cut interest rates to a record low without benefits being passed on to businesses and borrowers. I learned in a recent meeting with the Essex branch of the Federation of Small Businesses that many businesses are having either facilities withdrawn or spreads widened. A case in point is an automotive parts manufacturer in my constituency that has a £2 million loan outstanding. Notwithstanding the economic climate, it is still generating £2 million a year of cash flow, yet an internal decision taken at its bank that automotive loans should be withdrawn has meant that a perfectly healthy business is facing closure.
	The banks are not reciprocating taxpayers' continued trust and investment in them by maintaining support for perfectly healthy businesses in my constituency, in Essex and up and down the country. The Government have made a number of headline-grabbing proposals, including those noted in the motion: the working capital scheme, the national internships scheme, the asset-backed securities guarantee scheme, the homeowners mortgage support scheme, the car manufacturers finance guarantee and so on. None of them has yet been implemented.
	In the meantime, by scrapping the 10p tax rate the Government are hurting some of the lowest paid in our country. The problem is compounded by the record low interest rates, which are hurting millions of pensioners up and down the country, some of whom are receiving 0.1 per cent. interest on their savings accounts. Only two years ago, in a speech on 11 May 2007, the Prime Minister said:
	"If you work hard, you're better off. If you save, you're rewarded. If you play by the rules, we'll stand by you."
	However, in all their proposals the Government are doing absolutely nothing for those who have been thrifty and saved all their lives, especially pensioners.
	On 21 March 2007, again only two years ago, during his Budget statement the now Prime Minister reiterated his mantra that we would never
	"return to the old boom and bust."—[ Official Report, 21 March 2007; Vol. 458, c. 816.]
	Yet today we face one of the worst budget deficits in living memory, record borrowing both on and off balance sheet, a collapse in sterling, unemployment breaking the 2 million barrier—as the hon. Member for Coventry, North-West (Mr. Robinson) acknowledged, it is likely to climb to 3 million—and an economy shrinking both this year and next at a rate greater than almost any other western economy.
	Still the Prime Minister refuses to acknowledge that if he is not the cause of the collapse of UK plc, he is its architect. For that, at least, he should come to the House and apologise to the British people for taking Britain from boom to bust.

Robert Syms: I declare my interest as stated in the Register of Members' Interests.
	The debate has been interesting. I was at school in the early 1970s, when there had been a liberalisation of credit and a property boom. In 1973, 1974 and 1975, we had a bust. The difference was that the Bank of England created a lifeboat so that Slater Walker was wound down, along with several other banks and institutions. I think we had a problem with Burmah Oil, which ran out of cash and lost its shares in British Petroleum to the Government, who bailed it out.
	The crisis was similar, but the difference was that the Bank of England knew what was going on, got money together and sorted out the banking system in a few years. The changes that the Prime Minister made when he was Chancellor to the independence of the Bank of England have made a difference to our regulatory regime. Had the Bank of England retained its former role, I cannot conceive of being where we are today.
	Having said that, the City is a vast institution and we have some sophisticated banks. Our country rather depended on our property values and there were imbalances in the world economy, in which many countries generated too much in savings but Britain did not save enough. Savings flowed into our British economy and our banking system used them to sustain a property boom. Inevitably, the bust followed.
	To be fair, no one could foresee that the billions of pounds in the wholesale money markets would disappear as quickly as they did. If one is honest, one must recognise that that has probably caused an unprecedented problem. However, it has always been clear that that sort of money is hot money and that, in the long term, the most sustainable form of investment in the economy is savings and people putting money in banks in an old-fashioned way.
	There is now a massive hole in the British economy, which must somehow be plugged. It means a major adjustment to housing prices—the sooner that occurs, the better, so that the market can start to function normally again. Sterling has been devalued, and although I have mixed feelings about it, we can say, "Thank God we're not in the euro," because it means that the British Government can use economic and monetary policy by reducing interest rates and, to some extent, letting the currency take the strain. We also have the automatic stabilisers and the modest economic stimulus that the Government introduced, although I am not sure that the latter will make much difference.
	Three things have caused a major problem. First, as the crisis has unfolded, the Government have been behind the curve because they have come back with progressively bigger bail-outs and further help for the financial system. That has knocked confidence because people do not know where it will end and there have been a few surprises. My right hon. Friend the Member for Haltemprice and Howden (David Davis) set out what happened in Sweden, where everybody had to come clean to ascertain the damage at the beginning of a crisis. That would have been a far better way of dealing with the damage to our financial system.
	Secondly, although many of the Government's announcements have been broadly welcomed, it is a fair criticism that the detail was not worked out before the announcements were made. There has been a tendency to try to get headlines in the newspapers. Even when the schemes have been worked out, many people in the banking system and various other parts of the economy are not always aware of the detail. Many bemused businesses and constituents who have read about schemes in the newspapers have approached me to ask, "What's going on? Can we get it?" There is genuine confusion.
	Not only do more details need to be worked out, but there has to be more collaboration with the financial system and a system for disseminating information. In times gone past, benefits have been advertised in order to increase take-up among people. The Government ought to consider advertising as a means of getting across the message about where people can access schemes. The Minister has talked about a website; perhaps advertising the website would be a way of getting that message across. When people are in need and they think that some help is out there but cannot find out where it is, that tends to cause confusion and make them feel rather dispirited.
	Thirdly, the Government have to give a clear lead about where we are going. It does not help that at each stage of the economic crisis the Government have tended to go for a rosy scenario. The last full Budget was a "hope for the best" Budget. The growth figures in the pre-Budget report looked unrealistic even then, and they will need to be revised. The economic situation is deteriorating, but that was always likely to be the case. We will have a new Budget in April that will contain even more red ink detailing the Government deficit and Government debt, and the predictions of growth will probably be downgraded again. That knocks confidence.
	My hon. Friend the Member for Tatton (Mr. Osborne), who made the first speech that we heard this afternoon, put his finger on the main problem, which is the fact that the banks have had a bail-out but have been given mixed messages about what to do. We all have evidence that ordinary banking involving making loans to companies—many of them viable and profitable companies—is not occurring. There is a credit crunch in the British economy that is having an effect on businesses that are long-term and viable, but which face real problems in the short term.
	The Government have to iron out their version of the relevant scheme to try to get money moving in the economy. I have been in business for most of my life—I have a background in construction and property—and I have never known a situation like this. It is dire out there. Many people are hanging on by their fingernails. We need clear leadership from the Government about where they are going and clear information about the schemes that they are promoting, because we are going through a very difficult time indeed.
	We have had the financial shock and now we have the shock of the recession, with many people losing their jobs. However, levels of personal debt are substantially higher today than they were in the early '90s. That means that if people's incomes are diminished, it does not take very long for them to get into serious financial problems, even with the help that is available through the various schemes. That will eventually create a problem for the banking system, too.
	We are in for tough times. I agree with my hon. Friend the Member for Tatton that our economy might be configured very differently at the end of this recession and that we may look at things differently. We have to use our good offices to resist protectionism, which is a cul-de-sac, but we also have to get our banking system working properly; otherwise the long-term consequences and the damage to the social and economic fabric of our nation will be dire.

Peter Bone: It is a great pleasure to follow my hon. Friend the Member for Poole (Mr. Syms), who made a powerful speech about the issues that affect people. I was particularly taken by his remarks about the pound. The pound has gone down from $2.11 to $1.35, which represents other countries' views of how bad our economy is. However, we are talking about a market mechanism that has worked well, because it means that our exports are now cheaper in America. American imports are more expensive in this country, which is also the market working. However, as my hon. Friend said, that would not have happened if we had been in the eurozone.
	I refer Members to my entry in the Register of Members' Interests, and particularly to the fact that I am a fellow of the Institute of Chartered Accountants in England and Wales. I want to say from the beginning that I do not think that auditors have come out of this series of events with great credit.
	I have learned a lot from sitting here for several hours today. The speeches from both sides of the House have been useful, new ideas have come up, and things that I had not thought of have been mentioned. I find it disappointing, however—I say this with sadness—that the Chancellor was not here today. It is also particularly disappointing that we have not had a debate on the economy in Government time. All these billions of pounds have been spent without the issue being discussed in detail in the Chamber. I want to say to the junior Minister that I think it unfortunate that the Chancellor was unable to attend. I notice that he was here for Prime Minister's questions, but I am sure that he had a pressing engagement in a television studio somewhere in the country afterwards. I am making a serious point about what I see as a discourtesy to Parliament.
	I want to turn first to unemployment. I have run a manufacturing company and a service company, and the most difficult thing that I ever had to do in business was to tell people who had worked for me for years that they no longer had a job. I had sleepless nights beforehand, and sleepless nights afterwards. It was the worst thing that I ever had to do in business, so it gives me no pleasure at all to read out these figures. In February 1997, there were 2,063 people unemployed and claiming jobseeker's allowance in Wellingborough. Unfortunately, the figure today is 3,098. That represents a 50 per cent. increase since 1997.
	I recall that the Conservatives were thrown out of power in 1997 on a landslide, partly because of what had happened in the economy. I think that we have now reached a desperate situation in my constituency, and I say that with no satisfaction. We face a real problem. Thinking back to that rather nice little tune, "Things can only get better", I can tell hon. Members that they certainly have not done so in Wellingborough. We are significantly worse off than we were in 1997, and I fear that that situation is spreading across the rest of the country.
	I recently received a phone call from the managing director of a large employer in my constituency. I will not mention the name of the company for obvious reasons. It is a very good, well-established company that employs a lot of people, but, like everyone else, its orders have gone down because of the downturn in the economy. So what did one of the banks that we now own do? It went along to that company and said, "By the way, because your level of interest to turnover has fallen below a figure that we don't like, we are going to increase the interest on your borrowings by 2.5 per cent., or £750,000, a year." That could force this very good company either to lay off staff or to go under. That cannot be—I know that it is not—what the Government intended the banks to do, but that is what is happening in Wellingborough now, and it worries me greatly.
	One of the reasons that that is happening, in general terms, is that the banks had two options. One was to lend money to companies; the other was to get their capital ratios up by reducing such lending. The banks have gone for the latter incentive to improve their capital ratios. There is a strong argument for the Government giving a lead in the other direction on this. We cannot ask the banks to do both; it has to be one or the other, and they need some direction. I shall come back to the banks later if I have time.
	I want to talk about the business of bringing forward capital projects to increase employment. I see that as a very good idea. If capital projects could be brought forward, we would get the benefit of employment as well as a capital asset at the end of the day, which seems perfectly reasonable to me. In Wellingborough, however, we have a very strange situation.
	The further education college was given the go-ahead for a major redevelopment and it spent £1 million just getting it all arranged. Unfortunately, this major redevelopment also means knocking down the existing premises, moving on to a car park and allowing for the whole redevelopment of the town centre in Wellingborough. The go-ahead was supposed to be given on 17 December, but when 17 December came, no go-ahead was given. It was supposed to come last week, but the same thing happened again. We are told that the reason for the delay is that a Government quango had said to too many colleges that they could expand, so they have been left without the funds. Well, if now is not the time to bring forward funding for FE colleges, I do not know when is. I ask the Minister to address that. The Government said, quite logically, that something was going to happen, but it has certainly not happened on my patch—indeed, just the reverse.
	The bringing forward of capital projects does not seem to be happening in the NHS. My constituency is seeing the closure of an out-patient facility. In fact, a quarter of the people in Rushden wrote to me to complain about the closure, but the replacement facility, which is in another constituency, is not going ahead; there is a delay. That new facility could go ahead in my constituency right now; the land and plans are available, so why is it not being done?
	Let me deal with an issue where I think the Government have made a complete mess of investment in the banks. They have gone into the mode of saying, "We must do something; we must do something. We must get a press release out; it does not matter what it is, but we must get a press release out." I do not expect the Minister to nod in agreement, but I am sure that some wise heads in the Treasury were saying that the schemes must not be announced until they are place. However, I also bet that some spin doctors were saying, "We must get it out; we must get it out". I think that is what has happened.
	On the wider front, all this started with a mere £37 billion investment into a few banks. I know that it has ballooned into billions and billions more, but if we go back to that initial £37 billion, the share subscription documents that the Government drew up must have been drawn up on the back of an envelope. They produced preference shares and we were led to believe that that was how this would go forward—with a 12 per cent. coupon, non-cumulative, that was going to be redeemable after five years. That was impossible; that was never going to happen. Those preference shares have now been converted into ordinary shares.
	In my view, this Government have had no strategic policy and no confidence building; they have been running around like headless chickens.

Philip Hammond: The country is facing its biggest economic crisis in a generation. In the last 24 hours, we have heard from the International Monetary Fund not only that Britain's recession is deeper than that of any other western country, but that next year, while they will be growing, we will still be shrinking. We have seen unemployment figures rising at the fastest monthly rate since the 1930s, topping the 2 million mark. According to many commentators—indeed, according to the hon. Member for Coventry, North-West (Mr. Robinson)—that figure is heading rapidly towards 3 million.

Geoffrey Robinson: I did not give the forecast that the hon. Gentleman has quoted and I did not use the word "rapidly", but it is true that some forecasts point in that direction.

Philip Hammond: The hon. Gentleman said that unemployment would rise by another million. We shall all read the record avidly when it is published tomorrow.
	Of course, if the Government had not put off the Budget until the end of April, we would have had more bad news. We would have had an updated projection for next year's budget deficit, which—I do not think anyone will bob up to disagree with this—is likely to be nearer £140 billion than the £118 billion that was projected just four months ago.
	We have also seen Lord Turner's devastating critique not just of the financial regulatory system that the Prime Minister put in place but of his model of economic growth, based on global imbalances, huge bank leverage, and unsustainable levels of public and private debt. Against that backdrop, we have had to debate the economy in Opposition time—and we are debating it without the Chancellor, who cannot even be bothered to turn up to defend himself and his boss, and his own policies, and respond to the momentous economic news that we have heard today, although he was in the Chamber for Prime Minister's questions not 10 minutes before this debate began—so much for the Prime Minister's commitment to restoring the supremacy of Parliament. People listening to and watching this debate will draw their own conclusions about the Chancellor's motives.
	In fact, we have had no debate on the economy in Government time this year. Even when stung into reaction by the announcement a couple of weeks ago of today's debate, the most that the Government have been willing to concede is a general debate on the economy the week after next, on a non-substantive motion.
	We called today's debate because people throughout Britain who face redundancy, short-time working, layoffs, pay cuts, business failures, negative equity and repossessions cannot understand why Parliament is not debating the economic crisis all day, every day—never mind why it has not debated it this year. "Real help now" is the slogan, and I have a copy here of the glossy brochure that the Government have produced to promote it. But we have heard from Members this afternoon how hollow that slogan is, and it is clearly not a piece of rhetoric that the Chancellor is prepared to come here to defend. Nevertheless, I have to say—perhaps the Exchequer Secretary will convey this to the Chancellor—that even without him we have had a useful debate. Let me now mention just some of the important issues that have been raised in the course of it.
	The shadow Chancellor, my hon. Friend the Member for Tatton (Mr. Osborne), set the tone with a forceful case against the Government, along with a devastating analysis of Labour's failure to prepare the British economy for the problems that we now face and its continued failure to address those problems once they were upon us. Some of my hon. Friends offered specific examples of the failure of the Government's announced programmes to deliver.
	The hon. Member for Twickenham (Dr. Cable) made the important point that there is a distinction to be drawn between the institutional implementation of a programme and that programme's delivery of results at the sharp end. My hon. Friend the Member for Bournemouth, West (Sir John Butterfill) gave examples of constituents to whom the loan guarantee schemes were simply not available. We heard from my hon. Friend the Member for North-West Cambridgeshire (Mr. Vara) of the inability of a constituent of his to access an announced career development loan, and, perhaps even more worrying, the unawareness of his local jobcentre staff of that scheme.
	My hon. Friend the Member for Bosworth (David Tredinnick) gave an example of a denial by banks of access to one of the guarantee schemes for a company in his constituency. My hon. Friend the Member for Sevenoaks (Mr. Fallon) told us just how patchy knowledge and awareness of those schemes is, not just among jobcentre staff but among businesses. That point has been reinforced by the director general of the CBI.
	I think it was my hon. Friend the Member for Crewe and Nantwich (Mr. Timpson)—although he is a relatively new Member, he obviously has the knack of seeing right through the issues—who identified the problem, which is the Government's instinct to announce first and work it out later. His point was reinforced by the hon. Member for Northampton, North (Ms Keeble), who said that when something is announced it must be available. I hope that those on her party's Front Bench will take that message on board. She went on to explain the disappointment, confusion, dismay, anger and frustration caused when schemes that are supposed to be available are simply not there. That confusion, particularly in relation to help in the job and housing markets, adds to the loss of confidence, which, as my hon. Friend the Member for North-East Hertfordshire (Mr. Heald) pointed out, is so important at a time like this. My right hon. Friend the Member for Haltemprice and Howden (David Davis) reminded the House that Keynes himself came to recognise the critical role of confidence in an economic recovery. The recovery of confidence is, as a number of hon. Members pointed out, a necessary, if not a sufficient, condition for economic recovery and must be a principal focus of the Government's attention.
	Several hon. Members focused on the underlying problems in the banking system. My right hon. Friend the Member for Haltemprice and Howden drew attention to the very different models of Japan and Sweden, and the banking crises they had both suffered. He noted that the Government appear to be following the Japanese model of fiscal loosening while failing to get to grips with the problems in the financial system, and to be shying away from the Swedish response, which was ultimately successful. He offered a credible explanation for that choice: the Swedish route, of recognising the problems in the banks up front and taking them explicitly on to the balance sheet and dealing with them, requires some tough decision making, while the Japanese approach pushes the problem down the line to be dealt with and paid for later on. We all know that this Government's inclination is to push problems down the line—certainly beyond May 2010—even if that gives rise to the risk of zombie banks being created, as my right hon. Friend suggested.
	My right hon. Friend and a number of other Members referred to the challenge of defining the limits of taxpayer responsibility for banks in future, whether by some Glass-Steagall type approach or by other means. There was general consensus that the taxpayer will not in future be prepared to stand behind the kind of behaviour we have seen in the investment arms of banks. We will have to find a way forward—looking at the Turner report and the recommendations of Sir James Sassoon to the shadow Chancellor—to build a new structure that will protect the taxpayer while allowing a banking system to operate for the benefit of the real economy in this country.
	My hon. Friend the Member for Aldershot (Mr. Howarth), my right hon. and learned Friend the Member for Folkestone and Hythe (Mr. Howard) and my right hon. Friend the Member for Wokingham (Mr. Redwood) reminded us of the flimsy basis on which the Prime Minister's reputation for financial management was built. His great coup of the Bank of England reform of 1997 is now exposed as having delivered a dysfunctional regulatory system. As my hon. Friend the Member for Braintree (Mr. Newmark) said, the problems we are now facing began on the first day of this Labour Government, when the now Prime Minister crossed the threshold of No. 11 Downing street. My right hon. and learned Friend the Member for Folkestone and Hythe reminded us—contrary to what some Labour Members suggested—how he and others were warning in November 1997 that this undermining of the Bank of England would create "a field day" for "spivs and crooks". Again, in 2002, 2003 and 2004, when he categorised the then Chancellor's Budget as a "credit-card Budget", he—and others—were warning of the hollowness of an economic model that built an economy on the sand of excess debt. The truth is that my right hon. and learned Friend and other hon. Friends have consistently warned about the risks the then Chancellor was running with the economy, and they were consistently ignored.
	Several Members referred to the confusion in Government policy towards the banks—on the one hand urging greater lending, on the other hand urging them to rebuild their balance sheets. Several Members also gave examples of banks that do not appear to have received the message from head office of the deal that the Chancellor and Prime Minister tell us they have done on extending lending to businesses that need support. This problem urgently needs resolving if the measures that the Government have taken are to deliver a freeing-up of lending at the sharp end.
	There were a couple of interesting speeches made by those on the Labour Benches. The hon. Member for Newcastle upon Tyne, North (Mr. Henderson) used the D-word about this recession—I am sure that he will get a note about that later from the Whips. He accused the Conservatives of not being prepared to face up to what he called the "new economic situation". I should say to him that it is precisely because we are facing up to the fact that the challenges that the economy faces are on a scale not seen before and that the changes we will see in it require a sea change in our thinking that we have resisted signing up to the easy consensus being offered by Labour Members. We have insisted on taking on the chin the really difficult challenges that have to be dealt with. It is he and his colleagues who are not prepared to face up to the fact that their Government did not prepare the United Kingdom to withstand this downturn—they are the ones who are guilty of gross negligence and dereliction of duty in preparing the UK for the problems it faces today.
	Anyone listening to this debate would recognise that there have been massive failures of Government policy, both in the decade to 2007 and in the Government's response to the crisis since. I do not know where the Chief Secretary to the Treasury stands on the issue of apologies, but her boss and her husband have given one, yet the Prime Minister still insists on saying that he has "nothing to apologise for"—that is how the British people will remember him. He will be remembered as the Prime Minister who brought destruction upon the economy, but who says that he has nothing to apologise for—not the failure of his regulatory system, which contributed to the global crisis in the first place; not his failure to manage our public finances, which meant that we went into this recession less well prepared than any other major economy; not his hubristic claim to have abolished boom and bust, which led many people to borrow money they could not afford, a decision that they regret now and will regret for the rest of their lives; not his grandstanding abroad when he should have been fixing the problems at home; and not his endless stream of ineffectual announcements, which are still not delivering today for the businesses and the households of this country.
	A Prime Minister who implemented a financial regulation system that has failed so catastrophically, who operated a model of economic growth based on unsustainable public debt, unsustainable global imbalances and unsustainable household debt and who cannot acknowledge those failures, even now, cannot be part of the solution. He is the problem, he is the past, and the sooner we move on to the future, the better for Britain.

Angela Eagle: We have had an interesting debate and I wish to mention a few of the contributions that I have enjoyed listening to this afternoon. First, I should mention the one made by my hon. Friend the Member for Coventry, North-West (Mr. Robinson). He pointed out the untenable Conservative position of calling the Government response to the current conditions inadequate, while being against the Government's spending, which is needed to pay for any action at all. The speech made by my hon. Friend the Member for Crawley (Laura Moffatt) recognised the really difficult times for people and businesses that the current conditions we are battling are causing us to have to deal with.
	My right hon. Friend the Member for Oldham, West and Royton (Mr. Meacher) and my hon. Friend the Member for Elmet (Colin Burgon) gave us a critique of neo-liberalism and, in some cases, a timely analysis of the problems of inequality. My hon. Friend the Member for Newcastle upon Tyne, North (Mr. Henderson) cited Galbraith's statement about where the wise got their wisdom, but pointed out that the Tories are not ideologically comfortable with the direction that is needed to get us through the current problems. My hon. Friend the Member for Northampton, North (Ms Keeble) made an extremely good speech, talking passionately about the unfavourable consequences of the Conservative do nothing approach to the recession of the 1980s and 1990s, contrasting that with the Government's action so far.
	The main themes of the speeches by Opposition Members can be summed up in two words. Many Opposition Members, including the right hon. Member for Haltemprice and Howden (David Davis) and the hon. Members for Eddisbury (Mr. O'Brien) and for Wellingborough (Mr. Bone), talked about the need to restore confidence. If they wish to restore confidence, why do they go around scaremongering about levels of debt? Why do they talk down the British economy and emphasise the negatives, rather than help us battle the serious problems that we face?
	Other Opposition Members talked about how the problems here were caused by the Bank of England and the creation of the tripartite arrangements, but that has not had anything to do with the global recession that we now face. In fact, the problems of the global credit crunch have been manifested in every country, despite very different styles of financial regulation. Clearly, there are lessons to be learned, and Lord Turner has talked about some of those in the publication of his report today, which the Chancellor requested last October. The problems are deeper, as Lord Turner pointed out, and include the complex financial engineering that was going on, and the global imbalances between saving and spending, which manifested themselves in low-priced credit. All those issues have to be solved if we are to create a sustainable future.
	This debate has demonstrated the real differences that we have with the Conservatives over how to tackle the unprecedented economic challenge that we now face. The Conservatives like to insist that somehow the downturn we are now experiencing is all the fault of our domestic policy. In fact, the credit crunch began in the American sub-prime mortgage market. As it has reverberated around the world, we have seen a noticeable deterioration in global economic prospects. In the last quarter of 2008, the world economy shrank for the first time since 1945. The IMF now expects global growth to be negative in 2009. That will be the first global contraction for more than 60 years.
	The battle to end this global financial crisis and return the world to sustainable growth demands new ways of thinking and new ways of acting, both domestically and internationally. There are three priorities. First, the global economy is interconnected, so we can succeed only if we work together. Secondly, we need to stimulate demand and, thirdly, we must reform both regulation and international financial institutions.
	Whether the Tories like it or not, the fact is that the problems we are facing are shared across an interconnected world. It is only by acting together that we can tackle them effectively. That is why the G20 conference is so important. Our national action will be more effective if it is accompanied by globally co-ordinated responses. That is especially true of boosting demand and reforming regulation.
	What have we heard from the Conservatives to match the scale of the task that we face? The need for major changes to our systems of financial services regulation is obvious—

John Redwood: When did Treasury Ministers first become aware that there was a debt crisis in this country?

Angela Eagle: Far from demanding more regulation during the passage of the Financial Services— [ Interruption. ] The Conservatives spent their entire time in government and in opposition calling for less regulation, for markets to be free, and for markets to make the decisions. The right hon. Gentleman is one of the major causes and supporters of deregulation in the financial markets— [ Interruption. ] They do not like— [ Interruption. ]

Mr. Deputy Speaker: Order. The House gave a fair hearing to the Opposition spokesman in the wind-ups. These are extremely serious matters. Outside this House, people are watching the way in which we are debating them with great anxiety and the House should give a fair hearing to the Minister who is winding up.

Angela Eagle: Perhaps I might ask the right hon. Gentleman when he first gave me a warning about what was happening with debt in the British economy.
	We have heard that somehow all these issues are problems caused by our national regulatory arrangements. They clearly are not, because they manifest themselves around the developed world in advanced financial services and, in particular, in banks.
	Far from demanding more regulation during the passage of the Financial Services and Markets Act 2000, which created the current tripartite arrangements, the Conservatives called for less. The right hon. Member for Wells (Mr. Heathcoat-Amory), for example, said from the Tory Front Bench on Second Reading of that Bill that
	"we believe that regulation should be minimal"
	and that their concern about the Bill was
	"the danger of over-regulation".—[ Official Report, 28 June 1999; Vol. 334, c. 42-44.]
	The hon. Member for Chichester (Mr. Tyrie) expressed similar concerns. Four years later the then shadow Chancellor, the right hon. Member for West Dorset (Mr. Letwin), announced that an incoming Tory Government would abolish or rein in the FSA because of its "intrusive regulatory regime".
	In March last year, in the middle of the credit crunch, the Leader of the Opposition was still at it when he said:
	"I understand totally that the strength and success of the City of London has been based on light-touch regulation".
	It is little wonder then that just as the credit crunch took hold the right hon. Member for Wokingham (Mr. Redwood) was unveiling plans to scrap completely the regulation of all mortgages. So, are the Opposition in favour of boosting demand?

Rob Marris: Does my hon. Friend find it strange that the Conservatives in opposition now castigate the Government for proposing to double the national debt in the light of the worst world recession since 1946, yet the previous Conservative Government doubled the national debt when there was not such a deep world recession at all? They were the profligate ones, whereas we have had to pick up the pieces and pay down some of that national debt.

Angela Eagle: My hon. Friend is right.
	Are the Conservatives in favour of boosting demand to give real help now, just when it is needed, at the beginning of a recession? No, they are not. They are alone in the world in proposing huge spending cuts. They would repeat the mistakes of the past. They would take us back to the 1930s by weakening demand just when it needs to be strengthened. They have proposed to cut £5 billion from current spending plans by April this year. That is two weeks from now. Two days ago, the Leader of the Opposition was saying that Labour's determination to support demand and protect real people from the effects of the downturn was unaffordable. He said, "Does that mean some areas will be cut? Yes it does."
	The Tories also opposed the £20 billion injection of demand into the economy that we announced at the pre-Budget report. That means that based on the policies that they have announced—we have heard precious little of most of them—they would take £25 billion of spending out of our economy just as the recession is at its worst. They would let this recession take its course, whereas with real help now we have ensured that 12 million pensioners have received a £60 extra payment since January to support them at this difficult time—the Tories, however, are opposed to it.
	In April, all 22 million basic rate taxpayers will get a £145 tax cut. That is real help now, but the Tories are opposed to it. They make the completely unfounded assertion in the motion that the temporary cut in VAT has not worked. Evidence from the independent ONS shows that the tax cut has been reflected in price reductions in 70 per cent. of cases— [ Interruption. ]
	Mr. Andrew Robathan (Blaby) (Con)  claimed to move the closure (Standing Order No. 36).
	 Question put forthwith, That the Question be now put.
	 Question agreed to.

Question put accordingly (Standing Order No. 31(2)), That the original words stand part of the Question.
	 The House divided: Ayes 217, Noes 283.

Question accordingly negatived.
	 Question put forthwith (Standing Order 31(2)), That the proposed words be there added.
	 The House divided: Ayes 276, Noes 217.

Question accordingly agreed to.
	 The Deputy Speaker declared the main Question, as amended, to be agreed to (Standing Order No. 31(2)).
	 Resolved,
	That this House recognises the impact the international credit crunch is having across the world and for households and businesses in every region of the UK; supports the Government's decisive action to stop the banking system collapsing, secure the sector's role in supporting the economy, households and businesses and remove blocks to sustainable lending; notes the agreements made with Lloyds, RBS and Northern Rock to increase lending to individuals and firms; welcomes the action in line with other countries across the world to boost the economy this year and next with targeted support to people and businesses including the value added tax cut, helping homeowners avoid repossession, a range of measures to provide finance and defer tax liabilities for business, pensioner payments, increased child benefit and a tax cut of £145 for 22 million basic rate taxpayers; further notes the extra resources to support those facing redundancy and seeking work; further supports the bringing forward of capital projects to improve public services and infrastructure, and provide jobs now; further notes that the Government has set out measures to deliver sustainable public finances; further welcomes the Government's leadership of the G20 and its focus on co-ordination between countries, equipping the International Monetary Fund and the World Bank with the resources and tools needed, and reform of global financial regulation; and further supports the Government taking action now to come through stronger and faster so that the UK can take advantage of the world recovery.

Business without Debate

DELEGATED LEGISLATION

Mr. Deputy Speaker: With the leave of the House, I shall take motions 3 to 7 together.
	 Motion made, and Question put forthwith (Standing Order No. 118(6)),

Transport

That the draft Renewable Transport Fuels Obligations (Amendment) Order 2009, which was laid before this House on 9 February, be approved.

Pensions

That the draft Financial Assistance Scheme and Incapacity Benefit (Miscellaneous Amendments) Regulations 2009, which were laid before this House on 11 February, be approved.

Electricity

That the draft Renewables Obligation Order 2009, which was laid before this House on 11 February, be approved.

Representation of the People

That the draft European Parliamentary Elections (Northern Ireland) (Amendment) Regulations 2009, which were laid before this House on 25 February, be approved.
	That the draft European Parliamentary Elections (Amendment) (No. 2) Regulations 2009, which were laid before this House on 10 March, be approved. — (Barbara Keeley.)
	 Question agreed to.

FORD ECO-TOWN

Motion made, and Question proposed, That this House do now adjourn. —(Barbara Keeley.)

Nick Herbert: I am grateful for this opportunity to raise the question of the proposed eco-town at Ford, which would lie in my constituency and should it be given the go-ahead, in the constituency of my hon. Friend the Member for Bognor Regis and Littlehampton (Mr. Gibb). It is a proposal for 5,000 new houses, and the size of that development means that the settlement would dwarf any of the existing settlements in my very rural constituency of Arundel and South Downs.
	I have three key concerns about this proposal, which are widely shared by the local community and by the elected local authorities. The concerns are: the impact on the countryside and the rural character of the area; whether we have adequate infrastructure to support development on this scale; and the democratic issue—whether there is consent, whether people are being properly consulted and who should decide where development should go.
	First, I shall talk about the impact on the countryside. I do not know whether the Minister has been to this part of the world, but Ford is a tiny village that lies in the Arun valley, below Arundel, which is a stunning location sited on the edge of the south downs. The Ford eco-town would be very close to an area of outstanding natural beauty and potentially a national park if the Government were to give it the go-ahead. Were an eco-town, effectively a new town of 5,000 houses, to be located at that site, it would clearly dwarf the existing hamlet of Ford and effectively join up small villages including Yapton and Climping. It would create what would amount to a new sprawl of development that would not just include the eco-town itself but begin to join the existing villages. At a stroke, open countryside would have been transformed into a suburban setting. That is unacceptable.
	I was immensely concerned by how the developers sought to promote the development by arguing in their initial literature that it would be on a brownfield site. Yes, an airfield forms part of the site, but in fact 87 per cent. of the construction would be on greenfield land. The Government's own sustainability appraisal identified a number of key weaknesses in the Ford eco-town proposal, including the fact that the site is almost entirely greenfield and that there would be building on high-grade agricultural land—at a time, by the way, when we should probably be increasing food production in our country and worried about food security. The appraisal also stated that
	"although the area is not designated there is still a potential to change the setting and character of local villages"
	such as those I have mentioned.
	The flood risk also needs to be addressed, and the Government acknowledged that, too, as a key weakness in their sustainability appraisal. The appraisal acknowledges that, as a coastal area, Arun district is
	"likely to experience some of the most severe impacts due to climate change",
	and that there is a particular risk to ground water supplies. In an era when we have to be concerned about climate change, those should be serious concerns.
	The second category of objections that I wish to raise are those related to infrastructure. The developers originally told us that they would be able to spend £200 million on improving local infrastructure, of which, I should emphasise, we already have a significant deficit. We have very congested roads, including the A27, which is meant to be a coastal highway but is in fact a coastal car park. It is congested at key times, which I believe contributes significantly to the relative deprivation of Littlehampton and other coastal areas. Frankly, despite their proximity to London, the poor transport links of those areas have made them unable to share in the economic gains that other areas in the south-east have made in recent decades.
	It is that absence of adequate infrastructure, even with the current level of housing, that is of particular concern to local authorities. Clearly an additional 5,000 houses would create a huge challenge, for instance through the additional cars on the roads, even if it is supposed that a proportion of those cars would not be used because of the nature of the eco-town proposal. I make no general comment on eco-towns; I am making site-specific objections to the Ford proposal.
	The reality is that even in a city such as Brighton two thirds of households use cars, and that is in a city that is reputed to have exceptionally low car use. In my rural constituency there is 85 to 90 per cent. car ownership, and those who do not have cars are significantly disadvantaged. They cannot get about in rural West Sussex, even if they live in villages that are served by railway stations. I do not believe that the existence of a railway station at Ford—there is a question about whether it needs to be moved—is adequate mitigation against the loss of access that people would suffer if a new town were sited in the middle of the countryside, from where it is frankly unrealistic to expect them to be able to get around except by car. That is a major flaw in this particular scheme.
	The Arundel bypass has been awaited for decades. At one stage, it was about to be put in the Government's programme, but it is now a distant prospect, which will not even start until 2016. According to West Sussex county council, the indications are that the bypass is being pushed back, not forwards. There is a genuine question about whether the eco-town would be viable without a bypass around Arundel, given all the additional traffic that it would generate. There is also a conflict between the Government's advisers, who said that it would be wrong to build a bypass, and the developers, who originally said that one would and should be built and that they would provide money for it. Now they say that the eco-town does not depend on the bypass.
	It is impossible to conceive of siting a new settlement of 5,000 people without that upgrade in the key local road. It would mean major traffic congestion in the villages and in Arundel. That is a severe flaw in the scheme. Will the Government tell us whether plans for the Arundel bypass will be brought forward as part of the proposal for the eco-town?
	There is a further discrepancy in some of the developers' infrastructure promises. They say that they will produce a waste facility, but it will clearly rely on importing enormous amounts of waste from outside the proposed new settlement. The sustainability of that is questionable. Where will the waste come from? The proposal is out of kilter with West Sussex county council's existing programme. It has invested massively in a new waste treatment plant in the north of the county, to which the county's household and municipal waste will be taken. Another flaw therefore lies at the heart of the proposal. Lorry movements into the eco-town will pose a significant challenge to the concept of an environmentally friendly development.
	Let me deal with the democratic problem. The Government have effectively said that 11,500 houses are to be built in the Arun district in the next 20 years, and that figure was recently increased. It is a huge number for a rural district to absorb. We can argue about whether it is a proper number—my view is that it is an unsustainably large number of houses to seek to build in the district without creating major implications for infrastructure and the rural character of the area. Nevertheless, if that number of houses is to be accommodated because the Government say so, the local authority should decide where they are located. Arun district council has the knowledge and experience and can assess local opinion to make the difficult decisions about where the houses should be. There is a further question about whether eco-town numbers would add to the 11,500 or be subtracted from them. We cannot get a clear answer from the Government, and I should be grateful if the Minister felt able to provide one this evening.
	There is huge public concern about the proposal. Thousands of people have marched and 10,000 have signed a petition to oppose the plans. The relevant local councils, all the parish councils, Arundel town council, the county council and, above all, Arun district council, oppose the scheme. Arun has to consult about it now as part of its local development framework process, but it initially expressed opposition to an eco-town. It should decide where development goes—I do not believe that it should be imposed on local people.
	I should be grateful if the Minister agreed to meet my hon. Friend the Member for Bognor Regis and Littlehampton and me to discuss those issues before any decision is made. I hope that she will understand that the local concern about the issue is very great indeed. I fear that a significant part of my constituency is about to be irrevocably transformed, and I cannot overestimate to the right hon. Lady the seriousness of the issue or how it is regarded locally.
	I would be very grateful if the right hon. Lady agreed to meet us. Indeed, we have written to ask whether that would be possible. However, I made an error in writing to her by omitting to mention that we briefly met the former Minister for Housing, the right hon. Member for Don Valley (Caroline Flint), which was most welcome. She made a brief visit to the constituency, but we would nevertheless be extremely grateful if the current Minister for Housing agreed to meet us to discuss our concerns, in particular those about the latest assessment of the scheme's financial viability.
	I am extremely grateful for the opportunity to raise those concerns about the proposed development on behalf of almost every constituent who has written to me. There has been near unanimous opposition to the scheme. That is what I wish to relay to the Government.

Nick Gibb: I am grateful to my hon. Friend the Member for Arundel and South Downs (Nick Herbert) for securing this debate and for setting out the concerns about the proposed Ford eco-town so well.
	There is almost unanimous opposition to the proposal to build 5,000 homes on a pristine piece of Sussex countryside that links the beautiful historic town of Arundel to the River Arun and the spectacular marinas and beaches of the seaside town of Littlehampton in my constituency. People are angry about the proposal because it takes a top-down approach to planning, as my hon. Friend said, that completely circumvents the planning processes and the views and experience of local people and elected councillors.
	The draft planning policy statement breaks precedent by being site-specific, instead of setting out general principles. As the chairman of the South East England regional assembly has said:
	"The principle and location of eco-towns should be considered through normal development plan process, and the PPS and Eco-towns Programme should not supersede or over-ride local and regional plan-making."
	It is also clear from the sustainability appraisal that a development at Ford will be far from ecologically friendly or sustainable. In particular, it is clear to anyone living in that part of West Sussex that life without a car is extremely difficult, as my hon. Friend set out so well. The proposals are vague about how people could live at Ford without a car. We already suffer from an incomplete A27, which turns into a single-carriageway around Arundel and Worthing, frequently creating traffic congestion at points during the day.
	Arun district council has conducted two thorough select committee inquiries into the proposals. Among its many conclusions, the council has said that
	"without a by-pass for Arundel, major development in this location would cause significant congestion on the strategic and local highway network, and the Council does not accept that car reduction measures would be sufficient to mitigate this impact acceptably".
	Similarly, the A259, which runs from east to west in my constituency, is already congested for long periods at peak times. Cars from 5,000 houses would simply compound that problem. There is also a lack of clarity about whether the small railway station at Ford will be moved west and about whether it will have parking for 500 cars.
	Clearly some people will make money by turning agricultural land worth £4,000 an acre into building land worth £1 million an acre. As my hon. Friend said, 87 per cent. of the land is pristine, high-quality agricultural land. Even with that cash, however, we do not believe that it will be possible to deliver the three new schools, the social housing, the water recycling, the energy system, the new roads, the new bypass or the bunding for the river to protect against flooding that appear to have been promised at one time or another in this process. The financial viability study concluded at page 34 that
	"there are material uncertainties over the nature and cost of transport solutions required to meet Highways Agency requirements, small movements in the cost of which could adversely impact the viability of this proposal."
	People in my constituency are not nimbies. We understand the need for new housing, but in numbers and in locations that are sensitive to the environment in which we live and which are based on decisions taken locally by elected councillors sensitive to the views of the people whom they represent and sensitive to the fact that tourism is still a large employer in Littlehampton and Bognor Regis. That stretch of countryside is key to the beauty of the area and the attractiveness of both seaside towns for tourists. As the select committee concluded:
	"The Eco-Town would have a significant and damaging impact on the existing community, and would result in a substantial adverse change in the character of the District and this part of the coastal plain."
	A campaign has sprung up, entitled Communities Against the Ford Eco-town—CAFE—and my hon. Friend and I have been involved in it since the beginning. It has been highly effective in analysing the developers' proposals, the Government's planning policy statement and sustainability appraisal, and the financial viability study. On behalf of the whole community, I should like to thank Derek Waller, Terry Knott, Vicky Newman, Tom Sawyer and Susan West, among others, for the fantastic job that they have done in revealing all the many flaws in the proposals for an eco-town at Ford. The Minister's time would be well spent if she personally read their submissions and, as a consequence, dropped Ford from the list of eco-towns.

Margaret Beckett: I congratulate the hon. Member for Arundel and South Downs (Nick Herbert) on securing this debate, and I welcome the opportunity that it offers to set the record straight on a number of the points that he raised. I should also say at the outset that I have received his request for a meeting with him and the hon. Member for Bognor Regis and Littlehampton (Mr. Gibb), and I am happy to agree to that. I hope that that will give us an opportunity to explore these matters in continuing depth.
	First, I want to remind the House of the general principles behind eco-towns, before I turn to the specifics of the Ford proposal. By now, everyone should be familiar with the long-term need for more housing in the country. The most recent projections, produced only a few days ago by the UK statistics authority, serve only to underline and reinforce that case. The number of households is now predicted to grow to 27.8 million by 2031—an increase of 6.3 million even over the 2006 estimates. The House regularly debates the impact of the pressure on housing; we are all familiar with its effects. Families are unable to find suitable, affordable housing; young people are unable to take their first step on to the property ladder. We are also familiar with the need to build housing that responds to, and helps to, reduce the impact of climate change. Our housing currently makes up about a quarter of the UK's carbon emissions. That fact gets less publicity than some of the more glamorous venues, but it is infinitely more significant, particularly at the present time.
	There is no single answer to any of these challenges. We will need co-ordinated efforts to increase supply and to raise standards for all new housing. Although there is no single answer, we can accelerate innovation and promote best practice through exemplar projects such as eco-towns, showing what is possible and what is achievable. Eco-towns are just one of the options that local authorities can choose to adopt when planning to meet the challenges in their area.
	As my predecessors and I have repeatedly made clear, we are absolutely determined that only the best proposals will ultimately be taken forward. We have put in place a process for scrutinising and consulting on the proposals, and it is designed to be fair, rigorous and transparent. As requested, we have recently extended still further the deadline for consultation until 30 April, to give people even more chance to have their say. The intention is that the first eco-towns will be taken from drawing board to development over the next couple of years, with more to follow and up to 10 under development by 2020.
	Before I turn to the specifics of the Ford proposal, I want to make it very clear indeed that absolutely nothing that I say here tonight should be taken as any indication of the likely outcome for the proposal, or as pre-empting the shortlist. And of course, even were Ford or any of the proposals to make the final shortlist, they would still be subject to further testing through the planning process. That seems to be an aspect of the handling of this issue that is little understood. Ford is just one of a number of locations being considered for development of an eco-town. It is present in my mind, Mr. Deputy Speaker, that you have an interest in another of them.
	The proposal at Ford is for 5,000 homes, including 2,000 affordable homes, and it also proposes creating around 4,000 jobs, along with schools, green spaces, community and sports facilities. Such a proposal has the potential to make a significant contribution in an area where the shortage of affordable housing is particularly acute. In 2007-08, just 53 affordable housing units were completed in West Sussex—an increase, I might add, on 2006-07, but it is nowhere near adequate to meet local need.

Nick Gibb: When we meet, I will explain in detail why those figures are not correct, but the Minister should also know that, although the current recession is delaying them, 1,350 houses are waiting to be built, of which 40 per cent. will be social housing. That makes a significant contribution to people in the A, B and C categories on the Arun district housing waiting list.

Margaret Beckett: I am grateful to the hon. Gentleman. I have always been a strong believer in evidence-based policy making, so I will look very closely at any evidence he puts before me. I recognise that Arun district council has recently made progress in developing its core strategy and, as both hon. Gentlemen will know, an eco-town is just one of the options being proposed and now consulted on for the area. The alternatives up for discussion are sustainable urban extensions or, indeed, expansion of inland villages. This process of consultation should help the local authority to determine the best solution to meet local need. I hope that both hon. Gentlemen will continue to challenge the authority to maintain the momentum to build on recent progress and start to deliver results.
	Both hon. Gentlemen asserted a number of reasons why Ford would be an unsuitable site for an eco-town. I note those concerns: these are, of course, the very issues that this process of consultation and scrutiny is designed to draw out. As the hon. Member for Arundel and South Downs mentioned, the sustainable appraisal of the site has highlighted similar issues, particularly potential congestion on the surrounding road networks, but also the use of greenfield land and potential concerns about flooding. The sustainability appraisal also noted the potential strengths of the area, including the facts that there would be minimal impact on the local ecology and that the nearby railway station could expand to cope with increased demand.
	Overall, Ford, like the majority of locations so far put forward, has been assessed as in category B—it might be suitable, subject to meeting specific planning and design objectives. It might be helpful for the sake of clarity if I said here that the concerns and objectives that have to be met differ with each set of proposals. But whatever they are, they have to be met with each set of proposals. The very point of this whole process is to evaluate all the evidence to make an informed decision, highlighting the weaknesses so that developers have a chance to address them.
	We have always been clear that we are setting the standards very high and that not all the proposals will be successful. The sustainability appraisal, the consultation feedback, and a financial viability study will all help to inform decisions on the shortlist of locations that will be taken forward. I anticipate that that would be the start of the eco-towns programme, rather than the definitive list because I expect that, over time, more such proposals will come forward through the local and regional planning process.
	Let me touch on two of the more general points that have been made: the suggestion that there has been a lack of consultation, and the suggestion that there has been an attempt to undermine the planning process. Neither of those assertions has any basis in fact. As I have said, we recently extended the consultation programme, and these proposals are absolutely not about imposing development on local communities. On the contrary, we take the view that it is vital for residents to have every opportunity to have their say, including those most in need of affordable housing, whose voices may be drowned out by a vocal and active opposition. We are making clear what is being proposed, and asking for views on the overall programme and the individual standards being set.
	Let me repeat that all proposals that make the shortlist will still need to be tested through the existing planning process, and that that in itself offers a further opportunity for consultation and debate. In the recent judicial review, the judge noted that the Government had acted properly throughout, and dismissed the review on all grounds, saying
	"the government is using, rather than outflanking, the planning system. This process would not necessarily compel the grant of planning permission for a location on the list."
	Having quoted the judge's remarks, let me add that there are no done deals on Ford or any of the other proposed locations. Only those that meet our rigorous standards will be taken forward to the next stage as locations with the potential to be eco-towns.

Nick Herbert: rose—

Margaret Beckett: I am conscious of the time, and I want to raise one more issue on which the hon. Gentleman specifically asked me to comment. If local authorities include an eco-town in their future housing plans, they can be assured that that will count towards future housing targets, which in many places are likely to be more stretching.

Nick Herbert: rose—

Margaret Beckett: I want to say a few more words, if I may. If the hon. Gentleman still wants to intervene after that and if there is time, I will give way to him.
	I repeat that only the authorities that make the cut—only those that meet rigorously high standards—will be proposed, and they will still need to go through the local planning process.
	I hope that, whatever the outcome on the Ford proposal, we all agree that there is a critical need for more affordable housing in the area. I am encouraged by the information from the hon. Member for Bognor Regis and Littlehampton that other proposals are being considered, because such development is very necessary. It is not enough for people to reject the eco-town proposal out of hand. If it proves not to be the right answer, constructive alternative proposals will be needed.
	In my view, the programme represents an exciting opportunity to meet housing need while making sustainable living attainable and affordable for everyone. I believe that it has tremendous potential, but I am determined that only the best proposals will be implemented.

Nick Herbert: rose—

Margaret Beckett: I think we have about 30 seconds left. I do not know whether the hon. Gentleman—
	 House adjourned without Question put (Standing Order No. 9(7)).